Terra (LUNA) has the potential to hit $ 100 in the coming weeks as it draws a classic bull flag structure.

In particular, a bull flag appears when price tends to trade within a triangular pattern after a sharp upward move. Many analysts see this as a sign of a bullish continuation, meaning that they believe the pattern will eventually break the triangle’s upper trendline to move further up.

Additionally, the profit target of a bull flag structure is usually the same length as the size of the previous rally, known as the flagpole, measured from the breakout point. It appeared that LUNA formed a similar pattern on the lower timeframe chart.

4-hour LUNA / USDT price chart with bull flag setup | Source: TradingView

Given that the breakout occurs at the point where the bull flag trendlines converge – the top – the ideal profit target is above $ 22, the height of the flagpole. That puts LUNA on a path of nearly $ 100.

The catalyst that supports the price hike

The bullish technical setup in the Terra market came when LUNA gained nearly 65% ​​in less than three weeks and became the 10th largest cryptocurrency by market capitalization.

LUNA outperformed Dogecoin (DOGE) and Avalanche (AVAX) with a capitalization of more than $ 26 billion, representing nearly 1.18% of the total market valuation of $ 2.274 billion at press time. Meanwhile, the LUNA price rose from $ 43.5 to over $ 77 on December 5th, marking a new all-time high (ATH).

Circulating LUNA market capitalization | Source: Messari

Traders received a signal from Chiron Partners, a Hong Kong-based venture capital firm, that announced on Dec. 8 that it had raised $ 50 million for a special fund called Chiron Terra Fund I to help DeFi and metaverse-linked NFT – Build projects on the Terra blockchain.

Jake Cormack, CEO of Chiron Partners, recognized Terra’s growth potential behind her decision to choose it as the official public ledger, especially after the recent Columbus 5 upgrade to the blockchain, which promises greater scalability and greater cross-chain interoperability.

FOMO gdeflation

In detail, the Terra ecosystem consists of a group of stablecoins tied to a growing list of fiat currencies and the mining token LUNA. LUNA acts as a governance token, volatility absorber and instrument for collecting rewards through “Seigniorage – earn and spend coins” and trading volume.

In particular, volatility absorption turned out to be the strongest bullish argument for LUNA. It is noteworthy that the Terra ecosystem maintains the stability of the fiat currency by burning LUNA tokens. In other words, if the price of Terra’s native stablecoin TerraUSD (UST) exceeds $ 1, the LUNA protocol will burn to mine more USTs, bringing the value back down to $ 1.

Conversely, if the value of UST falls below USD 1, the protocol will exchange the stablecoin for LUNA to increase the price. With the Columbus 5 upgrade and Chiron’s $ 50 million fund promising to bring more projects to the Terra ecosystem, predictions of deflationary pressures on LUNA are mounting.

As Bitcoin magazine reports the use of stablecoin UST is increasing, with net supply hitting a new record high of $ 8.221 billion on December 8th. On the other hand, according to TerraAnalytics, the Terra protocol has been around since Columbus -5. over 104 million LUNA burned went live at the end of September.

Talis .s $ 2.3 million NFT marketplace

The bullish signals for LUNA before Chiron’s announcement were thanks to Talis. They raised $ 2.3 million in funding, led by ParaFi Capital and Arrington Capital, to build the NFT marketplace on the Terra blockchain.

LUNA / USDT vs. BTC / USD daily frame price chart | Source: TradingView

Two days after the announcement, LUNA rebounded nearly 13% and hit a new ATH despite a massive correction for Bitcoin, Ether and most other cryptocurrencies.

Join Bitcoin Magazine Telegram to keep track of news and comment on this article: https://t.me/coincunews

Disclaimer: This article is for informational purposes only, not investment advice. Investors should research carefully before making a decision. We are not responsible for your investment decisions.

Follow the Youtube Channel | Subscribe to telegram channel | Follow the Facebook page