terra Things got a lot worse in the cryptocurrency world after its ecosystem collapsed in May. The tokens known as LUNA and UST re-entered the market as LUNC and USTC after the collapse.
As reported by Koinfinans.com, in May 2022, Terraform Labs’ algorithmic stablecoin UST lost its stable value. After this decline, the LUNA price also fell very sharply.
The collapse of the ecosystem has brought billions of new tokens to the market as well as huge damage. It was a big deal that the Terra ecosystem was named Terra Classic and run by the volunteer community. But the billions of tokens left in the rubble have made things much more difficult.
To keep the USTC stable (as it is now known) before the crash, it created more LUNC tokens. Altcoins The price dropped from $68 on May 7 to $0.0001 just six days later.
Also, on April 7, 2022, Terra Classic had 346 million tokens in circulation. That’s when it hit an all-time low supply. However, with the collapse in May, the total number of coins in circulation for the altcoin reached 6.9 trillion.
Falling price and oversupply Terra ClassicIt was enough for ‘s to join the disgraced token family. However, the desire for wealth has fueled interest in cheap tokens and hopes for recovery.
While Shiba Inu is the first altcoin that comes to mind when it comes to burns, can the community-supported Terra Classic really get stronger? Some community continues to burn tokens to give a positive answer to this question.
Will Terra Burns Raise the Price?
Token burning consists of the definitive removal of a digital asset from circulation and the reduction of its supply. The main purpose of token burning is to reduce the supply, which helps the asset gain value.
If the demand for an asset increases, the burning process can be an extra force for the token price to rise. However, what the toughest market shows is that this alone is no difference for a larger capitalization.
For example, Binance’s token, BNB, spiked in the altcoin price in its early years, shortly after the exchange announced a burnout. But over time, these burns began to put less pressure on the BNB price, even as the demand for the altcoin increased.
It is possible to say that the same scenario occurs for the Shiba Inu. Although large burns are often made, the price is far from the old days.
In early October, $1.8 billion worth of LUNC tokens were burned by Binance, but that wasn’t enough reason for the crypto to rise. Aside from being a cryptocurrency that destroyed market confidence by losing 99% of its capitalization, the token has no real use case. For the price to really rise, 99% of the available supply must burn.
You can follow the current price action here.
Disclaimer: What is written here is not investment advice. Cryptocurrency investments are high-risk investments. Every investment decision is under the individual’s own responsibility. Finally, Koinfinans and the author of this content cannot be held responsible for personal investment decisions.