LUNC Price Prediction | Will Terra Classic Survive?

Terra is a blockchain protocol that was created in 2018 by Terraform Labs which was co-founded by Do Kwon and Daniel Shin.

In order to develop some end-of-the-year price assumptions for LUNC, there are a few different variables that we need to take into consideration.

These variables include the macro environment, current valuations in addition to positive and negative catalysts.

When thinking through possible price predictions for any asset class, we have to have some sense of where the economy is at the macro level.

At the time of writing, the FED has continued raising rates in 2023 and the federal funds rate is now at 5%-5.25%.

The last raise occurred in May of this year when the FED raised an additional 0.25% which was the 10th increase since March 2022. The market is currently pricing in that the rates will remain high (above 4%) for the next 2 years.

This matters primarily for two reasons. When interest rates are this high, investors prefer to earn safer returns by investing in high-yielding bonds. Also, the effects of high rates can also have a more volatile impact on the economy.

These factors (and others) mean that investors are likely to shy away from more risky assets such as cryptocurrencies. Historically speaking, high-risk assets perform well during times of low rates and high liquidity and perform poorly during times of high rates and more restricted liquidity.

From this point of view, we think it’s unlikely that crypto as a whole will see much price increase this year unless there are specific catalysts that could produce momentum and interest for a particular asset.