KEY POINTS

  • LUNA 2.0 has seen wild price swings since its launch
  • This is apparently due to investors' divergent attitudes toward Terra
  • Some investors no longer trust Terra after its earlier collapse

Terraform Lab rolled out the new Terra blockchain and its native token LUNA 2.0 but analysts have slammed the new cryptocurrency is "pure gambling" and that, unlike other digital assets, the latest version is a "speculative asset."

"This is pure gambling like crypto has never seen before," Copper head of research Fadi Aboualfa told Bloomberg. "One of the most important things about crypto is the brand or marketing and community, Terra has burned its community, and its brand is tarnished. Whatever they do here is going to be pointless."

The analyst's statement came after he observed significant volatility in LUNA 2.0 since it was launched Monday. The coin opened at $17 at launch on Kraken and reached a high of $30 and a low of $3 on the day, while it opened on OKX at $1 and touched a high of $20 and a low of $5. The new Terra coin started trading on Binance at $18 and recently reached around $8 price.

Terra
Terra UST Terra - Twitter

Some investors have lost faith in Terra and are determined to sell off their tokens to at least regain even a portion of what they have lost in their UST and LUNC investments. This behavior would trigger a shift in the market and depress the price.

Other investors are determined to hold on to their investments in the hope that Terra will find a way to recoup the community's confidence, thereby building the new coin's price in the process. These divergent outlooks are probably responsible for the massive swing in prices of the token, and making analysts view the new coins from the Terra stable as gambling.

"This initial volatility just shows to me that Luna 2.0 is now a speculative asset, and will likely trade on narrative until they can regain the trust of builders to bring fundamental value to the new ecosystem," Messari research analyst Thomas Dunlevy said. However, he also noted that he doubts it will happen since there are a lot of well-funded options available.

LUNA was trading down 23.35% at $6.61, with a 24-hour volume of $943,218,039, while the old token LUNC was trading down 21.16% at $0.0009725, with a 24-hour volume of $309,604,157, as of 9:56 p.m. ET on Wednesday, based on the data from CoinMarketCap.

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