We’re checking out more consolidation patterns in the crypto space, this time in Terra LUNA and HEX. Are traders ready to take both higher in their longer-term uptrends?
Last time we checked out LUNA last week, we saw it fall with the rest of the crypto market and risk assets during the initial panic from the China Evergrande debit crisis story. LUNA fell against the Greenback from $44 early in September to restest the strong support area around the $25 – $27 range. Buyers quickly bounced back over the next couple of sessions to $40, but cooled off a bit to current levels as traders likely hit the sidelines ahead of the Terra network’s major upgrade this week to Columbus-5.
Now that it looks like the upgrade seems to have gone off without a hitch, we may see buying pressure come back to the market as traders price in some of the new features of the ecosystem like inter-blockchain communication, higher rewards for LUNA stakers, and the potential for more LUNA burning if Terra’s main token, the UST stablecoin, gathers further adoption.
If that scenario plays out, look for a sustained break above the falling ‘highs’ pattern marked on the chart above for a potential long entry as that may draw in more technical buyers. Also, any dips from this point to the $35 may also draw in buyers as well, so be on the look out for bullish reversal patterns there if you’re longer-term long biased on the ecosystem.
Of course, if the market breaks below the $35 handle, and it’s due to hiccups in the ecosystem after the upgrade and/or a broad shift in risk sentiment that lifts the U.S. dollar, the next move could be back to the $25 in no time.
On the four hour chart above, we’re seeing a consolidation pattern on HEX, a pretty unique asset in the crypto space. HEX is self billed as the “first Blockhain Certificate of Deposit,” and like a bank CD, holders of HEX are rewarded by locking up their HEX through native staking contracts. These rewards are paid by the inflation mechanism built into the code and distributed penalties incurred by stakers who end their stakes early.
HEX is actually a really big asset in terms of market cap, over $230B according to nomics.com, making it the third largest crypto asset in the world. And the one of the unique things about about HEX is that it seems to be a finished product. It looks like no new development is being done, so a blockchain CD product is likely all it is going to be.
And apparently that seems to be enough for the token to increase in value as it started 2021 trading at $0.0070, massively rallying since then to $0.41 in today’s price, for a 57x gain….incredible! Without any new developments to the blockchain to spark catalysts, this rise in value is likely due to the low trading supply (possibly due to the staking feature) vs. a rise in demand.
In recent weeks, though, the market seems to be stuck between the $0.40 – $0.50 handles with a pattern of lower ‘highs’ and higher ‘lows’ in the works. Is a simple blockchain CD product with no updates enough to draw in further demand and create an upside breakout? We’ll see, but if that scenario plays out, a break above $0.50 could draw in technical buyers looking to ride the momentum higher.
Of course, if we see the rising ‘lows’ pattern break, that could draw in more HEX holders to unstake and take profits, potentially taking HEX to the $0.25 – $0.30 range in a week or two, based on the weekly ATR of around $0.06.
What do you all think? Will LUNA and HEX resume their uptrends soon or are we about to see consolidation break downs ahead? Let me know in the comments section below!