Gate.io Blog Market Trend 23/5 - 29/5 ｜LUNA 2.0 launches, ETH loses 2k, Altcoins go haywire

Market Trend 23/5 - 29/5 ｜LUNA 2.0 launches, ETH loses 2k, Altcoins go haywire

30 May 11:58

Over the past two weeks, we have continued to establish that the following week would be one of great caution as the market remained on a tight rope of tendencies as investors wait for more consistent flows to define where we might be heading next.

When it comes to Bitcoin, such remarks remain the same as the asset once again stayed under its previous $30k resistance and fluctuated between 28 and 30k as per the previous week. When it comes to Ethereum, however, the situation was far different; the second-largest crypto saw a 10% dive under its previous $2k resistance. As an inevitable result, altcoins were largely affected by the ETH downtrend and spiralled towards any direction; some top 100 made 90 to even 150% in the week, while others continue to struggle.

But the main news of the week is definitely the recent release of Terra 2.0 under its Luna 2.0 token (now just called LUNA). Although it can be an exciting time for the community, the future does not look bright as many questions are left unanswered.

LUNA 2.0 launches, immediately nosedives

LUNA 2.0’s 24-hour chart, as the crypto was launched in the morning of May 28th. Source: CoinGecko

Over the past few weeks since the LUNA/UST crash, the crypto community has been eagerly speculating on what the Terra Foundation would do to fix the situation - one that has been openly attributed to project errors, with founder Do Kwon potentially testifying in South Korean court soon. After some nail-biting weeks, it was determined that the previous LUNA and UST cryptos would be abandoned and labelled as “classic”, similarly to what happened with Ethereum and its previous version Ethereum Classic.

The change was largely received with support from the community and some exchanges, who offered LUNA 2.0 airdrops for those affected by the crash. Despite the relatively good news, a lot was left unanswered; what will become of Terra from now onward, if UST and stablecoins as a whole are being abandoned? With an uncertain future and a very dark past, the results spoke for themselves when LUNA 2.0 launched. In the morning of May 28th, it dropped from its initial value of $19 dollars to $5 almost immediately - a 69% drop, with its lowest at 4 dollars.

There is no possible reasoning to establish what might come of this new LUNA next. It’s as volatile as volatility can be and, judging by how airdrop receivers reacted to the launch, people just wanna use it to cut their losses and move on.

ETH loses 2k

Not only did ETH lose its $2k support, it almost touched 1.6k. Source: CoinGecko

Is it too early to state that Ethereum at $2k won’t be around again in the near future? Perhaps, but the second-largest crypto’s drop over the previous week is a scary one, to say the least. After a long battle to stay at this landmarked support since April, the past week saw Ethereum drop from 2,097 to its lowest at 1,724. Currently standing at a 10.1% weekly loss, ETH’s daily trading volume continues to rise and almost touches Bitcoin’s at this point; $13 billion for BTC against $10 billion for ETH.

Although the fall is a harsh one, it’s certainly not surprising; widespread uncertainty in financial markets is the key motivator for this, which inevitably impacts cryptocurrencies the most. Not only so, but Bitcoin’s top position and title as a hedge against economic turmoil will always put it at a lower risk of a downturn than Ethereum and respectively other currencies. Similarly, Ethereum’s recent breakpoint below 2k has put immense pressure on altcoins - which are experiencing extreme volatility.

Altcoins haywire with ETH drop, massive volatility

A rule of thumb regarding altcoins during bear markets is that, with great volatility in Bitcoin and Ethereum, the effect is drastically amplified when it comes to the other sectors of crypto - especially Layer-2 projects based on the Ethereum blockchain.

The previous week saw immense volatility in the altcoin sector, with Chain (XCN) and Evmos (EVMOS) surpisingly taking the lead with massive gains across the ecosystem as the other altcoins bled. Ethereum classic (ETC), not necessarily an altcoin, also had a surprising upside riding on LUNA news as some retail investors discovered that Ethereum has a “classic” version. On the biggest losers’ side, nothing new here: Luna Classic (LUNC) continues to top the charts, while ApeCoin (APE) and STEPN (GMT) continuous losses over the past few weeks are a strong indication that the market continues to reject NFTs during this bear run.

Author: Gate.io Researcher: Victor Bastos
* This article represents only the views of the researcher and does not constitute any investment suggestions.
*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all other cases, legal action will be taken due to copyright infringement.

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Market Trend 23/5 - 29/5 ｜LUNA 2.0 launches, ETH loses 2k, Altcoins go haywire

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