Terra Luna Classic (LUNC) price lacked clear direction for several weeks before posting a three-day sharp increase. The sudden surge pushed the token up nearly 30% at its intraday peak. However, technical and on-chain signals suggest that the breakout may struggle to maintain momentum.
The broader cryptocurrency market regularly experiences bursts of volatility. LUNC’s recent moves stand out more for their speed than their structural strength. Although price trends briefly turned bullish, fundamental indicators point to the need for caution.
Bitcoin – Cause of LUNC Rise
The main catalyst for LUNC’s rise was a surge in trading volume. Increased speculative activity caused short-term price increases. At the same time, the correlation between LUNC and Bitcoin dropped to 0.04, indicating almost complete decoupling.
Such a low correlation suggests that the token temporarily moved independently of BTC. The decoupling phase can attract traders looking for isolated momentum plays. However, a similar pattern has recently appeared in several altcoins. These changes often reflect short-term speculative rotations rather than permanent structural changes.
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LUNC is under bearish pressure
The Chaikin Money Flow Indicator reveals a worrying divergence. Despite the price increase over the past three days, the CMF did not see sustained capital inflows. Capital inflows into the market remained subdued relative to price fluctuations.
A bearish divergence formed as prices rose while the CMF weakened. This pattern indicates that the buying pressure did not match the strength of the rally. The spill continued quietly below the surface.
Durability is questionable due to weak inflow confirmation. Without consistent capital accumulation, a bull market risks reversing. Price movements that are not supported by strong liquidity are often corrected as speculative interest wanes.
Derivatives data reinforces the cautious outlook. LUNC’s funding rate is currently in negative territory. Negative funding indicates that short positions are more dominant than long positions.
The sum of the funding indicators shows that traders are prepared for downside risk. Rising short-term interest rates could dampen the upward momentum. If the short bias continues, LUNC may continue to consolidate unless forced liquidations cause a squeeze.
LUNC price may not rise much
LUNC has rallied around 20% over the past three days, with recent intraday highs surging 30% before falling to $0.00004136. A long top line on the chart indicates rapid profit taking. Rapid distribution at higher levels limited further upward continuation.
Current technical conditions indicate a bearish bias. If the selling pressure increases again, LUNC could fall towards $0.00003459. This level coincides with the 23.6% Fibonacci retracement. A breakdown below $0.00003459 could expose the next support near $0.00003236 and invalidate the bullish recovery story.
On the upside, LUNC remains constrained below the $0.00004203 resistance marked by the 61.8% Fibonacci level. If we can decisively break through this barrier, it will change the momentum in the short term. A switch to support at $0.00004203 could push the token above $0.00004530, invalidating the bearish theory for the time being.
