Terra Luna Classic (LUNC) has been in the news lately after being among the market’s top gainers. In fact, while Bitcoin (BTC) and other cryptocurrencies have suffered significant losses, the cryptocurrency has made double-digit gains in the last 24 hours.
The power of LUNC is not new. On June 14, AMBCrypto reported how the altcoin was up as much as 34%, while the broader altcoin market was suppressed with gains of just 6%.
Its recent rise has raised the question of whether LUNC can sustain its gains despite both volume and price gains. This is a combination that usually indicates a sustained bull market.
LUNC fundamentals provide clear retail warning
The altcoin appeared to carry a clear fundamental caveat, especially in how retail investors treated it. Consider this: There has been a noticeable decline in Google Trends, a key indicator for measuring retail search interest in a property.
At press time, the Google Trends reading had dropped to roughly 21 – the lowest level since far It reached a high in early May. This was when interest rose as high as 95 on the charts.
Search Trends measure retail sentiment, where higher searches indicate curiosity and the propensity of this group to convert capital into assets. On the contrary, lower search implies the opposite.
That’s not all, though, as Community Sentiment, a tool where investors mark their outlook by voting bullish or bearish, revealed that interest has also fallen since then. In fact, the share of bullish investors fell nearly 5% to 73%.
A decline in both sentiment indicators increases the likelihood that the price will follow suit and fall further in the near term.
LUNC’s capital base shrinks on spot and permanent venues
LUNC’s spot and permanent venues also sent a clear signal; Capital outflows on both sides of the market emerged as a major concern.
At the time of writing, the spot market chart revealed striking capital exiting the asset; This is a sign that investors may withdraw.
This persisted as a pattern over the last three days even before the asset broke out significantly with a net flow of around $260,000. In fact, LUNC recorded an outflow of approximately $620,000 in the last 24 hours alone.
The perpetual market seemed to be telling us a similar story about the general contraction of capital. The tightening of capital means that investors are less willing to take risks, believing that the asset may be in a highly volatile phase and steer clear of liquidations.
The pullback appears to deepen further in the persistent market, where outflows have fallen over the last 24 hours, three days, seven days and 10 days, reaching $2.05 million.
The constant tightening of capital, combined with investors withdrawing money from the spot market, leaves the asset without an adequate basis to push upwards. This may cause the ongoing rally to face the risk of decline in the short and near term.
Final Summary
- LUNC has gained double digits while much of the market has been declining, but the interest behind this move may be fading quickly.
- Money leaving LUNC on both sides of the market is a sign that investors may be quietly cashing out.
