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Should I buy Terra (LUNA) in 2021?

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kevinnag58
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INTRODUCTION

In this subsection of the Terra (Luna) Coin Guide, let's investigate what factors exist relative to this asset that will effect your decision on whether or not to invest in the same. We will look at factors both in favor of making an investment as well as against investment, the statistics behind the coin, a brief price history of the coin, and finally a few reasonable price predictions. The purpose of this subsection is to provide you with a starting point for the diligent research necessary prior to making a final investment decision.

*FACTORS IN FAVOR OF INVESTING IN TERRA (LUNA):

  • Terra (Luna) has benefited from the recent interest generated in stablecoins due to their more predictable price.
  • Terraform Labs, the company which oversees Terra (Luna) has attracted financing from some big names in the crypto community (i.e. Pantera Capital, Arrington Capital and Lightspeed Venture Partners, who cumulatively have pledged $150,000,000 toward Terra (Luna) projects)
  • On top of this $150,000,000 funding, Terra (Luna) has received an additional $57,000,000 funding from such names as Huobi Capital, Hashkey Digital and Divergence Digital. This funding is vital to Terra (Luna) as it receives all of its operating capital from outside sources, making no money from transaction fees for use of its cryptocurrency.
  • Terra (Luna) has a solid management core. Terra (Luna) was co-founded in 2018 by Do Kwon (a software engineer who previously worked at Apple and Microsoft) and Daniel Shin (whose background is in e-commerce).
  • Terra (Luna) already has an operating use case, Chai Payments, its partner, which has over 2,000,000 users and processes over $1,000,000,000 in transactions/year.
  • In addition to Chai Payments, Terra (Luna) has two other current use cases that derive it value. Mirror Protocol which allows for investors to make tokens tracking real world assets. and, Anchor Protocol which is simply a lending and savings application.
  • The Terra (Luna) ecosystem is capable of communicating (interoperability) with several other blockchains.
  • As Terra (Luna) is an algorithmic stablecoin ecosystem to successfully maintain peg, "...Terra can provide users with lower fees, more stability, seamless cross-border exchanges, and highly responsive financial assets. [Aouamri, S. "Should we invest in LUNA (Terra) cryptocurrency now?". (Accessed August 17, 2021).
  • Terra (Luna) already has an established customer base particularly in South Korea and Mongolia. Terra (Luna) is pushing its way into the US markets by aggressively offering a 20% annual interest rate on its US Dollar backed stablecoin UST (on its Anchor Protocol).
  • Terra (Luna) is in the top five cryptocurrency projects in revenue generation.

*FACTORS AGAINST INVESTING IN TERRA (LUNA)

  • Investors holding Luna token may stake them to receive a portion of the transaction fees collected when Terra is used. The staked tokens are used to verify transactions (governance). While staked tokens may be unstaked at any time, the unstaking process may take up to three weeks, depriving the user immediate use of the tokens.
  • While Terra (Luna) has a large user base in the South Korean markets (and somewhat of a large base in Mongolia), it is unknown whether or not Terra (Luna) may gain traction and popularity elsewhere in the world.
  • Terra (Luna) has an awful lot of catching up to do to be competitive with the larger blockchains (i.e. Ethereum).
  • Terra (Luna) has a large number of market rivals as the concept of stablecoins is hardly new.
  • Terra (Luna) may not be an appealing choice for blockchain purists. The Terra blockchain runs on a limited number of nodes. While this fact may be good in the area of reducing chain latency, it also causes less decentralization as compared to other blockchains with hundreds or thousands of interconnected nodes verifying transactions and maintaining the chain ledger.
  • Avoidance of the creation of borderless digital banks has been the target of Regulators worldwide. Should Terra (Luna) continue to grow geographically, they will fall squarely in the cross-hairs of said Regulators.
  • Worldwide expansion by Terra (Luna) will create serious scalability issues to the currency that may, in fact, impede its growth and profitability.
  • A slight challenge exists in finding an Exchange that lists Terra (Luna) for trading. Most of the top exchanges worldwide do not list this asset.

*TOKENOMICS

Per CoinMarketCap, at the time of the writing of this subsection (August 17, 2021 at 16:45 EDT) there is a circulating supply of 408,987,961.34 LUNA. With the current price of $24.37 the market capitalization of Terra (Luna) is $10,029,597,540. There is a total supply of 993,680,819 Terra (Luna) tokens authorized yielding a fully diluted market capitalization of $23,438,181,962.

*PRICE HISTORY

No discussion on this topic concern investment decisions in an asset would be complete without a review of the price history:

When we look at the Terra price charts, we see that it was relatively stable at all. Terra LUNA entered the market at a price of $1.27 and was trading at a range of $1-1.5 for the first months. Then, Terra prices started to drop, and in late September 2019, Terra was trading above $1 for the last time until early 2021. In late December 2020, Terra started to grow significantly and finally experienced a price boom in the first months of 2021. In February, it was traded at $3-$7, and in March, its prices exploded to $21. This is mainly associated with the growth of Bitcoin price at the beginning of the year, which also positively impacted other cryptos.

[Trading Education. "How To Buy Terra (Luna) In The USA". (Accessed August 17, 2021)].

*PRICE PREDICTIONS

The information provided under this header is based upon analysists predictions of the future price movement of Terra (Luna) going forward. Please take this information at its core, it is little more than the analysist's educated guess on the future price and is in no way a guarantee of the same.

Generally, cryptocurrency analysts believe Terra is a good long-term investment, and the LUNA coin has promising price predictions. Wallet Investor considers Terra a profitable investment with a huge potential to keep growing. According to them, its prices can go up to $53 in one year and $198 in five years. According to Digital Coin Price predictions, Terra LUNA's price will also rise in the following years to $28 in one year and $57 in five years.

*CONCLUSION

Investing in any cryptocurrency is a risky business that should not be entered into lightly. While Terra (Luna) is in the stablecoin business and that implies price stability, volatility may be exacerbated in the native asset here due to regulatory intervention in the stablecoin arena. This is a key risk in this area now and must be one of the important factors to be considered in whether or not to invest.

The contents of this subsection should not be a substitute for your own diligent research on whether or not to invest in Terra (Luna). This gives you the starting point for your research endeavors. And of utmost importance never make an investment in a sum of money you can not afford to lose. Good luck!

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