What happened
The ride so-called "Lunatics" have been on over the past year is perhaps one of the most incredible ones we've seen in the world of cryptocurrencies. Terra Classic (LUNC -3.30%), a blockchain project born out of the previous high-flying Terra ecosystem that supported an algorithmic stablecoin, is a shadow of its former self. After plummeting from a high of nearly $120 per token last year, investors can now pick up LUNC tokens for roughly $0.0003 apiece. This implies a near-total loss for those who bought near the peak.
That said, today's impressive spike in LUNC is starting to garner attention. As of 11:30 a.m. ET, Terra Classic has surged 33.7% over the past 24 hours. This about-face comes as prominent crypto exchange Binance announced it would support the Terra Classic community in burning all trading fees. In a blog post released early this morning, the Binance team ran through the details of how these burn transactions will take place.
So what
Given the rather complex restructuring that's still ongoing with the Terra Classic blockchain, there's plenty of room for speculation around this token. Accordingly, investors had seen previous rallies in this token that many have attributed to the equivalent of meme rallies in recent weeks.
Previous rallies have been tied to an announcement from the Terra team that a 1.2% burn tax would be placed on all transactions. The goal of this burn tax is to ultimately reduce Terra's bloated supply of its LUNC token from 6.9 trillion to around 20 billion. That said, such burns are meaningless if crypto exchanges do not engage.
Thus, Binance's announced move to honor the LUNC community proposal put forward earlier this month is a big deal. Those concerned about the tokenomics of this beaten-down project now have a catalyst to jump on today.
Now what
This recent rally for Terra Classic is certainly a move that's grabbing attention among speculators right now. Given how far LUNC has fallen in short order, there's plenty of room to the upside, should retail investors buy into this momentum-driven rally. Accordingly, this will be a fun token to watch from here.
While this move from Binance does support the thesis that the supply of LUNC may not be doomed to increase forever, this is a token that has seen downside of late. That's because despite the aforementioned burn tax proposal, LUNC's supply has continued higher in recent weeks. Investors will likely want to see some meaningful downside movement in terms of the number of available tokens in the ecosystem before getting too excited. At least, that's my take on today's move.
