Terra Classic 1.2% tax burn supports bullish expectations but there is a problem
TERRA CLASSIC [LUNC] It’s been a very exciting time in the past few days as he approaches the major implementation phase. Since the May crash, the community has expressed concerns about an oversupply of LUNC in the market. The 1.2% tax aims to solve this problem.
Unfortunately, many LUNC traders and potential traders may not understand what the 1.2% tax means, so here’s a brief explanation. All on-chain LUNC transactions will be subject to a 1.2% tax. This includes wallet interactions and smart contracts. However, LUNC trades on exchanges may not qualify for tax.
The idea behind the tax is that it will help reduce oversupply in LUNC. One major downside is that it will make Terra Classic cross-chain transactions more expensive.
A price that society is willing to accept this trade-off in favor of a deflationary outcome. It remains unclear whether potential projects looking to roll out their protocols to the Terra Classic will find this challenging.
broke down :
Are you ready to propose 1.2% tax
Burn parameter change?
RT if you want the burn to happen pic.twitter.com/hcjdKjaxbs
– luncvalidator (luncvalidator) September 1, 2022
LUNC . missile
LUNC delivered a strong bullish performance this week likely due to the 1.2% positive tax response. Such actions will significantly reduce oversupply and this will have a positive effect on price action in the long run.
The coin is up nearly 160% in the past seven days. This upside was enough to put him deep in the overbought territory and therefore the current short-term bearish outlook.
The crypto is already down 16.77% at press time, confirming that profit taking was already taking place after overbought conditions.
However, its downside may be limited given that tax and burn mechanisms already encourage a lot of capital injections at lower price levels.
Furthermore, LUNC is currently experiencing an influx of social size. This has been the case for the past couple of days, which indicates that more and more traders are paying attention to what is happening.
Such a result may encourage further accumulation of LUNC and mitigate its downside because there is now a strong incentive to HODLing in the long term.
The Terra Classic weighted sentiment scale is trying to improve significantly in favor of the bulls. These developments may plunge LUNC into a strong build-up phase now as investors prepare for the network.