Terra (LUNA) on Spotlight

LUNA, the native crypto coin of the Terra blockchain project is one of the top-performing coins in the market. In the last one year period, it has gained over 16,000%, moving up from $0.20 (₹15) to near the $50 (₹3,750) level.

It is currently the 11th largest cryptocurrency by market capitalization and as of 8th Oct 2021, the coin’s total market cap is close to $18 billion. 

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Terra (LUNA) on the Spotlight

To understand what are the factors responsible for LUNA’s steep increase in valuation, first, you need to know about the Terra blockchain project and the utility of the LUNA token.

Terra is a blockchain project developed by a South Korean blockchain startup Terraform Labs in 2018. It builds next-generation decentralized applications and also powers startup’s other cryptocurrencies, including UST stablecoin. 

The UST coin, which is pegged to the U.S. Dollar is very crucial to the growth of the LUNA token as it plays an important role in its supply and valuation. You must now be thinking, how a stablecoin can impact the price of another cryptocurrency? It’s all in the tokenomics of LUNA. Let’s take a look at the coin. 

What is LUNA?

LUNA is a utility token of Terra blockchain that fuels the network and is used as collateral for stablecoins.

To mint every UST coin, a certain percentage of a LUNA token is burned. Therefore, if the demand for UST coins rises, more LUNA tokens will be burned, thus resulting in reduced liquid supply in the market. 

In 2021, year-to-date, 82.14 million LUNA tokens have been burned and the liquid circulating supply is close to 127 million. 

Now, to give you a perspective, Terraform Labs also has an online crypto payment service, Chai, which is one of the fastest-growing payment technology companies in Korea. It allows users to pay in cryptocurrencies including UST for all their daily transactions. This is something that might buzz you about the LUNA’s future growth potential and how much it benefits from the growth of the Terra ecosystem. 

Let’s check what LUNA/USD price charts indicate of its near term price movement. 

Technical Charts: Terra (LUNA) Price Prediction 

source: tradingview.com

An analysis of the daily charts of the LUNA/USDT pair indicates bullish strength in the price momentum. The 20 days EMA is offering nice support, which traders should keep a close eye on.

On the Fibo Retracement indicator, which is used for determining the key support and resistance levels, the $39.22 (₹2,944) and $32.80 (₹2,460) levels are key support levels. Any break below these levels will pull the prices further down. 

For long term investors, buying on dips will be the best strategy for this coin. 

Terra (LUNA) on the News

Columbus-5 Upgrade

The forthcoming LUNA Columbus-5 upgrade will improve LUNA’s capability as a global payment system. One of the significant development after the upgrade will be, Terra will get connected to the fast-growing Solana network, which will enable usage of UST tokens in the Solana ecosystem. UST will become a multi-chain stablecoin, like Tether. 

Funding from VC Investors

Recently, Terra has got a huge boost in the form of investments from multiple VC firms. It has received investment interest from Arrington Capital, Lightspeed Venture Partners, and Pantera Capital. They have pledged an investment of $150 million in the blockchain startup to help incubate various crypto projects linked to the Terra ecosystem.

The other high profile investors in Terra include Binance Labs, Huobi Capital, OKex and Dunamu and Partners. 

Terra has many interesting projects in its pipeline and is largely focused on building financial apps on its own blockchain. An ecosystem to replace the traditional banking system. 

Like, through its Mirror app, users can create synthetic financial assets that are similar to tokenized versions of corporate stocks, etc. 

Yes, Terra is enabling a simpler, more accessible and decentralised financial ecosystem, but now, it would be interesting to see how Terra will expand beyond the boundaries of Korea. And, if able to successfully execute, definitely, LUNA can go to the moon.

Crypto Experts on LUNA

Flood Capital on LUNA:

“UST is currently the 5th largest stable coin with an m-cap over $1.87b and ~$100m daily trading volume; it has done this with only 7 exchange listings. The Luna ecosystem has generated massive demand for UST with no major listings, this indicates clear product-market fit.”

“The Luna ecosystem has just really started with only 2 major applications, yet this has caused the creation of over 1.5b UST in the past 3 months. As Luna continues to attract developers, new protocols and UST demand will explode, we are still early.”

P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.

Polygon (MATIC) is once again back on the radar of traders and investors, as it moved up from $1.04 (₹77.73) to $1.7 (₹129.84) level in the last one month, marking a gain of close to 70% during the period. According to coinmarketcap.com, MATIC is currently the 18th largest cryptocurrency by market capitalization, having a total market capitalization of $9.2 billion as of 26th Aug 2021. 

Polygon (MATIC) on Spotlight

The MATIC coin moved up swiftly in the list of most valuable cryptocurrencies earlier this year, taking everyone in the market by surprise. And, the coin has outperformed every other big coin in the market by a huge margin. In the last one year, MATIC coin price has moved up from $0.02 to $2.78 level, recording a gain of over a whopping 15,000%. 

For those who are clueless about Polygon, it’s an India-based Ethereum blockchain scalability platform that provides a framework for building and connecting Ethereum compatible blockchain networks. It combines the best of Ethereum and sovereign blockchains, thus helping Ethereum to become a full-fledged multi-chain system. Thus, improving the functionality of the Ethereum blockchain by increasing network scalability and transaction speed. 

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Let’s have a look at the MATIC USD price chart and what it indicates about the near term price movement. 

Technical Charts- MATIC Coin Price Prediction

Polygon (MATIC)

Source: tradingview.com

The analysis of the daily price chart indicates a price correction in the near term. 

After making a high of $1.68, MATIC is experiencing quite a bit of selling and has corrected close to 20% in three trading days. Both MACD and RSI are indicating weakness in prices in the near term. 

The 50 Day EMA, which also coincides with the 38.2% level in the Fibonacci retracement, will act as strong support and is unlikely to break below that level easily unless there is a weakness in the broader market. If it breaks below the line, then the next strong support levels as per Fibonacci retracement are $1.15 (50%) and $1.02 (61.8%).

Keep a check on the trading activity level on the CoinSwitch Kuber App, which shows the percentage of buyers and sellers in the market and helps to understand the market sentiment. 

MATIC Coin News- Polygon Acquires Hermez Network

In the quest to improve its product suite, Polygon has acquired Hermez Network, a zero-knowledge (ZK) cryptography-based scaling platform for $250 million. 

For Polygon, it marks their foray into the ZK solutions, which was in their strategic focus for quite some time. 

“This merger is our first big foray into the ZK scaling field after we publicly announced ZK-based solutions as our strategic focus moving forward.”  Polygon said in a statement.

The zero-knowledge proof in blockchain offers more anonymity and better privacy protection to users, which the current blockchain systems lack. Its use cases include- messaging, authentication, storage protection, sending private blockchain transactions, democratizing vote verification, security of sensitive information, etc.

Knowing its significance and potential, Polygon has committed to invest $1 billion to develop ZK-based solutions.

Other notable partnerships include a tie-up with crypto-friendly neo bank, Cashaa and with Infosys, where Polygon will be running a validator node on the MATIC network mainnet. 

Another BIG question. Will Polygon be relevant after the launch of ETH 2.0?

For most of us, the general understanding is, after ETH 2.0 goes live, Polygon will be rendered useless. So, here is what the founders of Polygon have to say on the matter.

“Let’s think of it as the supply of scalability. At the moment it (scalability) goes up on Ethereum, the demand is already there. It will grow immediately and you will end up with the same bottlenecks.”

“The demand is 1,000 X than where we are. You will need L2 scalability”

Now you know how Polygon is playing a crucial role in the development of the crypto and decentralized ecosystem. And, making everyone optimistic about its growth potential. 

P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.

Cardano (ADA) has experienced a crazy runup of over 100% in a month’s time frame, moving up from $1.02 (₹75.90) to $2.20 (₹157) level. According to coinmarketcap.com, ADA is now the 3rd largest cryptocurrency by market capitalization, with a total market cap of $67.78 billion (₹5.1 trillion) as of 19th Aug 2021. And, the market dominance level stands at 3.55%. 

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Cardano Spotlight

Cardano in recent months has gained massive popularity due to its unique and versatile blockchain on proof-of-stake (PoS) protocol that offers greater scalability along with environmental sustainability. Also, factors like the growing concern of the environmental impact of cryptocurrency mining have contributed to its rise. 

For the uninitiated, Cardano is a third-generation PoS blockchain platform that enables the creation of decentralized applications (DApps) and comes with multi-chain interoperability features and verifiable smart contracts. 

Here’s what the ADA USD price chart indicates of the near term possible price movement.

Source: Tradingview.com

It’s a mixed indication coming from the analysis of the price chart. 

The  20 days EMA has crossed above the 50 days EMA, which indicates a short term bullish trend in the counter. And, ADA is also comfortably holding on to the gains despite a bit of negative sentiment prevailing in the broader market, which is positive. 

However, tread cautiously as other indicators like RSI, Stochastic, and MACD are in an overbought condition. If the price of ADA slips below the $1.78 level, there could be more correction. The next major support level is the $1.48 level. But, that’s unlikely to happen in the current market. 

Watch out for the 50-Day EMA line for gauging the sentiment, unless it breaks below, the sentiment will be overall positive. 

In another scenario, If ADA breaks above the $2.2 level, then it would most likely move towards its peak of $2.30 or higher. 

The Alonzo Purple Upgrade- Why is it so Important?

One of the major reasons behind the euphoria surrounding Cardano is the Alonzo purple hard fork. It’s the final hard fork of the Alonzo phase, which included- Blue, White, and Purple. The hard fork is planned for September 12th, 2021. 

The Alonzo Purple hard fork will enable many new features into the Cardano blockchain. For instance, the fork will enable the execution of smart contract functionality on its network, development of new DApps, and Defi functionality. 

It will let Cardano directly compete with blockchain platforms like Ethereum, Binance Chain, Solana, Polkadot, and other similar blockchain platforms. 

​​Konstantin Anissimov, executive director at London-based crypto exchange CEX.IO stated:

“With Friday’s revelation that the mainnet launch is on track, crypto investors and enthusiasts, in general, were hyped on the optimism that a supposedly superior blockchain infrastructure with the possibility to support the next generation of smart contracts is on the horizon,”.

P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.

Have you ever imagined how professional and experienced traders profit massively on their trades without putting in much of their trading capital? It’s because they use margin on their trades. 

In other words, they use borrowed capital provided by the broker or exchange to increase their position size in the market. 

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As simple as it may sound to you, but margin trading is difficult and involves considerable risks. A wrong trade can amplify your losses, but it can improve your rate of return if done correctly.

This beginner’s guide aims to help you understand the basics of margin trading and the jargons used in crypto margin trading. 

Let’s dig in. 

What is Margin Trading? 

Margin Trading refers to the process of buying and selling securities on borrowed capital to increase the rate of return. Such transactions are funded by brokers/exchanges who lend the trader cash to enter the trade. And, once the traders close or square-off their trade positions in the market, they settle the margin. 

Using margin you can enter into significantly larger trade positions than you could enter with your account balance. Therefore, with a small change in the price of the asset in your favour, you will end up with huge profits. 

But wait, don’t jump the gun in favour of margin trading so soon before knowing the complexities involved, which we are going to discuss in the next section. 

How does Margin Trading work?

Let’s start with an example. Suppose, by analysing the market trends, you are predicting at least a 5% upwards move to $42,000 in the next two days in Bitcoin.

Therefore, you decided to go long but you can buy only 2 BTC with the amount of money you have in your account. Hence, you decided to use 50X leverage and went long on 100 BTC. 

The trade performed according to your expectation and you ended up with a profit of $20,000. Buoyed by the outcome, you once again used margin to enter a trade expecting a similar return. But, the Bitcoin prices unexpectedly crashed by 10% and now you are sitting with a huge loss and have breached the minimum maintenance margin level, resulting in a margin call from the exchange. 

This is how margin trading works, but what’s about margin call, let’s understand it in detail.

What is Margin Call?

In margin trading, you always need to come up with the minimum equity requirement, also known as maintenance margin. It means you need to have a certain level of cash or securities in your account at all times. The maintenance margin acts as collateral, so in the event of loss in trade position, the exchange can use it to cover the loss. 

However, before the exchange can use the maintenance margin, a margin call is triggered, where it asks the trader to deposit funds into the account to meet the minimum margin requirement. In failure to do so, the exchange will use the maintenance margin to cover the loss. It’s not an ideal situation for any trader and hampers their trading abilities. 

In the cryptosphere, due to the robust risk management system and framework in place, exchanges liquidate position automatically as and when it breaches the maintenance margin to protect from further losses.

The Relationship Between Margin and Leverage

Margin and leverage are the two most used terms in margin trading and you need to understand the difference and relationship between the two terms. 

Both margin and leverage are considered similar, but they are not. 

Margin refers to the debt and is expressed in percentage, whereas, leverage refers to the taking on debt and is expressed in a ratio. 

In other words, the margin is used to create leverage. For example, on a 2% margin requirement, the leverage ratio is 50:1 and on a 3% margin requirement, the leverage ratio is 33:1. Leverage always has an inverse relationship with margin. The following table shows the leverage ratio depending on the margin requirement. 

When a trader opens a leveraged position, they need to put up as a fraction of the position as margin, which is also known as the required margin. For example, on a 5% margin, the maximum leverage will be 20X and on a $100,000 position, the margin requirement will be $5,000.

Risks in Margin Trading? 

  • Risk of huge losses: In margin trading, the risk of losing more than you have invested or the initial margin is the highest. As the positions are highly leveraged in margin trading, a small change in price against the trade can lead to massive losses. For example, on 20X leverage in your trade position, the risk of loss also increased by the factor of 20. 
  • Risk of liquidation: Exchanges constantly monitor all your margin positions and when the MTM (mark-to-market) loss exceeds a certain threshold, you are asked to provide additional margin. If the margin is not sufficient, the exchange keeps the right to liquidate your trade positions to limit losses and use the maintenance margin to recover the losses. 
  • Minimum balance maintenance: You are required to maintain the minimum margin at all times, and failure to do so results in forced selling of trade positions, irrespective of the market trends. You may lose the chance to recoup your losses if the market conditions improve following forced liquidation. 

The Safe Margin Trading Practices

  • Know the margin requirement before placing the trades 
  • Use stop-loss and trailing stop-loss orders to limit the risk of loss and avoid a margin call
  • Scale in trading positions gradually, rather than entering all at once
  • Know your requirements from the specific trades, if the trade objectives are met, exit the trade position soon
  • Invest wisely and invest the sum you could afford to lose
  • Go for a lower leverage level on all your trades as every increase in leverage, proportionately increases the risk of loss 
  • Go for short term trades when using margin to avoid paying interest and reduce the risk of uncertainty in the market, which can affect your trade positions

Is Margin Trading Suitable for You?

To many, margin trading looks like an attractive proposition to make quick money in the market, but the risks far outweigh the benefits. Certainly, margin trading is not for everyone, especially beginners. And, if you don’t know the tricks of the trade, the chances of losing more money is higher than you invested.

If you are planning to start trade on margin, first check your trading strategy on a demo account and its effectiveness. Proceed only when you are confident about the success of the trading strategy following all the safe practices to minimise the risk of loss. 

P.S: KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing.