Bucking the trend of a crypto market-wide sell-off, LUNA, the native token of the Terra network, reached a new all-time high of US$59.63 this morning, after gaining 17% in the past 24 hours before settling back to US$57.70 at publishing time, according to CoinMarketCap. Meanwhile, Shina Inu Coin and Ethereum’s Ether continued to shine.
Terra’s LUNA to the moon
Currently the world’s 13th largest blockchain, Terra has gained over 800% since July and 55% in the past week alone.
“Terra is one of the stablecoin projects out there that’s getting a fair bit of attention alongside a slew of other really interesting projects,” Jonathon Miller, Australian managing director of crypto exchange Kraken, told Forkast.News. “When you compare that to dealing with [global traditional banking services provider] Swift, you can see why there’s value in stablecoins and why blockchain will continue to disrupt traditional finance.”
Terra is what’s known as an algorithmic stablecoin project — it issues a native stablecoin called UST that is pegged to the value of the U.S. dollar, but differs from other stablecoin projects as LUNA is used to supplement the token whenever its value begins to diverge from US$1. Prior to a recent upgrade to the network in late September called Columbus-5, LUNA that was burned to keep the UST’s value stable was sent to a community pool. With the new upgrade those tokens are instead permanently burned, and with the reduced supply of LUNA there has been a corresponding increase in its price.
Describing stablecoins as a “powerful tool” for unlocking liquidity for global crypto investors, Miller says such tokens play an important part in the crypto ecosystem by connecting users with decentralized finance and allowing seamless cross-border payments. In a sign of the growing interest in stablecoins, earlier this year Circle, the issuer of the world’s second-largest stablecoin USDC, secured a US$440 million investment in new funding from Digital Currency Group among others. More recently the firm also contributed 500-million-yen (US$4.38 million) to a Series A funding round for JPYC Inc., the issuer of the Japanese yen-pegged stablecoin JPYCoin.
Shiba Inu Coin buoyed by Kraken news
Meanwhile, Shiba Inu Coin, the Dogecoin copycat that has been nipping at the heels of the crypto top 10 in recent weeks, was up 47% overnight as Kraken announced it was listing the token on its exchange. SHIB reached a two-week high of US$0.0000538 before retracing some of that ground throughout the day. Sitting just above Terra in 12th place with a market cap of nearly US$25 billion, SHIB was trading at US$0.000046 at press time, according to CoinMarketCap.
“There’s a powerful [community] of passionate followers on social media when it comes to SHIB and other coins like this, but SHIB in particular seems to have quite a vocal community. And that’s something that we respond to,” said Miller of Kraken, regarding the decision by Kraken — the fourth largest cryptocurrency spot exchange in the world — to list Shiba Inu Coin after due diligence was met. “We strive to offer clients a broad array of assets with the infrastructure that allows people [and] counterparties to come and trade.”
Reaching a new all-time high of US$0.00008845 in late October, Shiba Inu Coin briefly overtook Dogecoin as the premier memecoin in the market by reaching seventh position on the leader board by market cap. This recent price jump notwithstanding, Shiba Inu Coin has declined nearly 50% since that time, and Dogecoin has regained its position as top dog despite being pushed out of the crypto top 10 recently after a price surge by Avalanche cleared the list of memecoins for the first time since mid-April. Dogecoin was trading at US$0.22 at press time, according to CoinMarketCap.
Ethereum rises as Bitcoin slumps
Ethereum’s Ether, the world’s second most popular cryptocurrency, is also nearing the all-time high it set earlier this year as ETH prices gained close to 9% in the past 24 hours to trade at US$4,742 at press time, according to CoinMarketCap. This contrasts with the fortunes of Bitcoin, which has seen significant price fluctuations today, rising and subsequently falling roughly 5% in quick succession amid remarks from U.S. Federal Reserve chair Jerome Powell on how high and persistent inflation is a growing concern that could cause the Fed to end its bond purchase program sooner than expected.
“At this point, the economy is very strong, and inflationary pressures are high. It is therefore appropriate in my view to consider wrapping up the taper of our asset purchases, which we actually announced at our November meeting, perhaps a few months sooner,” Powell said, addressing the Senate Banking Committee about the effects of Covid-19 on the U.S. economy.
While Bitcoin is typically viewed as a hedge against inflation and Powell’s statement could have some bearing on Bitcoin’s price, Miller says that during a recent period of price volatility for the world’s largest cryptocurrency, there are multiple other factors that affect crypto markets.
“[There has been] an arm wrestle between the bulls and the bears in the lead up to Christmas post-Thanksgiving,” Miller said, adding that Ethereum’s growing list of use cases means it is capable of gaining ground, even as Bitcoin might be slowing.
“[Ethereum] has other factors that are driving it rather than just an inflationary story,” Miller said. “There’s a lot to be said for crypto in general, in terms of how many industries that it reflects a disruptive potential for — Ethereum having possibly one of the broadest at the moment. Bitcoin is still an incredibly strong asset and a great store of value over the long run. And I see that persistent inflation only building further into that story as we enter 2022.”
Bitcoin was trading at US$57,234 at press time.