Terra Luna Classic (LUNC) has jumped back to the headlines this week but bearing positive news this time. The algorithmic altcoin has soared over 200% in the last 7 days, reaching its highest value in the last 3 months.
As the illustrious altcoin starts its slow climb from zero, a unique trend has been spotted. It seems that LUNC prices pump every time Bitcoin prices dip, and it’s not a new trend. The inverse relationship between LUNC and BTC goes back almost two years, even when Luna was at its peak.
So, it begs the question, is LUNC the gold of the crypto industry? Let’s explore.
Exploring the relationship between Luna Classic and Bitcoin
Just six months ago, Luna was one of the top 10 biggest cryptocurrencies in the world. In April this year, it reached an all-time high of $119.18, when the rest of the crypto market was suffering from a major bear run.
Between January to April this year, Bitcoin prices fluctuated within the $40k zone, dropping to $35k at one point. However, during this time, Luna kept rising from $85 to nearly $120. Following the bull run, Luna lost its entire value due to the depeg of its stablecoin.
A similar trend was also visible during Luna’s rise in 2021. The altcoin has always gained significant traction whenever bitcoin prices have dipped. Since Terra initiated a new tax burn mechanism on Luna Classic earlier this week, LUNC has again started to pump. On the other hand, Bitcoin prices have started to dip.
BTC prices have dipped over 10% in the past two weeks, while LUNC has pumped almost 300% in the same period.
This trend is very similar to the relationship between gold and the stock market. Generally, when the stock market falls, gold prices go up. This inverse correlation between gold prices and equity is valid for all global economies. In fact, it’s not just for pure gold – even gold items such as coins, bars, jewellery, and gold ETFs soar in prices when the stock market performs badly.
Although Luna Classic and Bitcoin are following a similar trend, the relationship between gold and the stock market has been observed for over a century. So, LUNC might be the gold of the crypto industry, but we can’t say it for sure until this trend is observed for a long period of time.