In this newsletter, we are profiling Terra [LUNA]. In previous newsletters, we have profiled Bitcoin, Cardano, Stablecoins, Uniswap and many others. Access all our newsletters in our archives at madcapx.substack.com.
The Short of It
Solana (SOL) has been on a tear lately, but Terra’s LUNA has been the better investment over the last few months. If you have been only a hodler of BTC and ETH, you have been left in some LUNA dust.
The Terra mainnet launched in 2019 and was founded by Daniel Shin and Do Kwon of the Korean company Terraform Labs. Terra, with their coin, LUNA, is attempting to make using cryptocurrency easy and seamless for everyone. Creating your own pegged token (mAsset) based on a collateralized asset is now achievable without vast technical experience.
The Terra blockchain was built with the Cosmos SDK and uses the Tendermint Proof-of-Stake consensus protocol. As of now, the ecosystem can only handle a few hundred transactions per second. LUNA is technically inflationary, with a “soft” maximum supply of one billion. If the supply ever ends up going over this amount, the appropriate difference is burned. This is one of the few newer cryptocurrencies that had no ICO and was initially funded completely by private investments, mostly by large exchanges. Around 26% went to private sales, 20% to employees and contributors, 20% to the Terra Alliance, 20% for a stability fund, 10% to Terraform Labs, and finally, 4% to aid in liquidity on exchanges. You can stake LUNA, but sadly it has one of the lowest yearly returns at only 1.5%.
One very interesting feature, which launched in 2020, is the ability to create pegged tokens on the network. US Terra (UST) and the Korean “won”-pegged token called KRT are very popular. To make a “mAsset” (using Mirror Protocol), you need to depository at 150% of the current asset value in either some Terra stablecoin or mAsset as collateral. Using this method, you can essentially reproduce synthetic stocks. Terra utilizes the Band Protocol as an oracle service for mAssets but uses its own validators to look up current prices.
CHAI is their mobile payments app, powered by the Terra blockchain network. Terra has partnered with Cosmos, Solana, and Polkadot to make Anchor Protocol for guaranteeing stable interest rates on yield. There is an app with a user-friendly interface being worked on which will allow managing all aspects of their ecosystem called Alice. This is still in the beta-testing phase.
With so many other cryptocurrency projects trying to make decentralized finance a reality for everyone in an easily accessible manner, can Terra pull it off even better? Another one to keep an eye on going forward, and there is still plenty of time to get on this rocket, as the trip is really just starting.
The chart history goes back to July 2019 on Binance with very little real upside till 2021. The LUNA token paired against BTC on the weekly chart showed over a 540% increase in the last 3 months. The only resistance LUNA currently has the current all-time highs from the previous two candles.
When we zoom in closer to look at the last two weeks of LUNA/BTC on the 4-hour scale, we pick up a trend that has good bullish overtones. Will LUNA stay within these trendlines as several altcoins continue to be bullish once again.
The next chart shows some further patterns for LUNA/USD chart on the 4-hour. This shows LUNA in a bullish pattern over the last 41 days. For the first part, it stayed confined within tight bullish trendlines. Mid-August it broke out and created more volatile bullish trendlines and has seen gains of 87% to an all-time high of $36.86 USD.
This YouTube video goes through several of the indicators of where LUNA is at currently and possible upside. Is the next peak at $39.50 before the next correction, or does it have some downside to low $30s touching the current support?
The Other Trend Lines
A few weeks back, we profiled Fantom (FTM) in issue #41; we wrote, “Look for a break above the top resistance trendline. If it breaks, then we would be looking for the $0.32 previous higher peak to be broken.” From that $0.32, it went up and had gains of 185%.
This portfolio section gives you an idea of what sort of return you can get when investing in crypto assets.
BTC/USD FUND is up 349% since October 1st, 2020. Since this is a long-term holding, it is best kept in cold wallet storage or a safe custody solution. We continue to see a long-term hold position as our best stable alternative. This past week bitcoin has been ranging between $46,250 and $49,632 USD in value.
FUND 3 started on November 16, 2020, with $1000 USD in value and was invested into BTC, LTC, ETH, and ADA. The total amount of BTC value from the four coins has had a gain of 167% since the start. The USD fund value is up 676% since the start. We will hold these positions to see how well it does against our BTC-only portfolio. LTC is down -16% against BTC. ETH is up 148% against BTC since the start. ADA has a gain of 833% against BTC and 2583% to USD.
BLWX Fund started on February 22, 2021. They all are assets we have profiled in the last few months, and we are interested in how they will perform in 2021 against BTC. BAT has a gain of 66% against BTC since the start; LINK is down -7%, WAVES is up 182%, XMR is up 41%. Overall, against BTC, the fund is up 71% and 50% against USD.
Overall, Bitcoin should be your first choice as an investment in crypto, though many digital assets can give you amazing gains if you manage your risk. As a long-term investor, we see it as our largest portfolio investment. If you are a day trader, there are many great assets to put on your watch list. Look through our previous newsletters to find some.
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Madbyte does have its own token called MADX on the Ethereum network and Madbyte on the Waves network. The two tokens are interchangeable on Madcapx.com.
Disclaimer: Nothing in this newsletter is intended to serve as financial advice. Therefore, do your own research and due diligence before applying any of the techniques highlighted in this post. Any risks or trades based on this newsletter are committed at your own risk.