Terra aims for the moon

after a gloomy first couple of months of 2022, crypto assets have entered March on an interesting positive note. for the first time in a while (>2 years) they are showing a significant divergence from the stock markets. one of the reasons behind this is believed to be the economic fallout of the Russian invasion of Ukraine, which has seen many lose access to their own money stored in traditional financial systems. in the trailing one-week period leading up to March 2, the price of Bitcoin has seen a jump of around 20%, from ~$37,000/token to ~$44,000/token. but it has been significantly outperformed by a different, much younger crypto asset.

what is Terra and why has it risen 85% over that same period?

tech talk

from a technical perspective, Terra which trades under the symbol ‘LUNA’ on markets, is a blockchain protocol which uses stablecoins pegged to fiat currencies (such as Rupee, Dollar, etc.) to power global payments systems while minimising price-fluctuations. this is a power mix of two important advantages. it provides the geopolitics-resistant and fast-cum-cheap transfer enabled by crypto assets. at the same time, it combats one of their biggest risks, price volatility.

at present, it has found widespread adoption in South Korea as an easy cross-border payments solution for ecommerce businesses. this is just one of the many use cases that can be powered by Terra. it is this potential for real-world adoption that has rocketed it to a market cap of over $33 billion seeing it overtake the likes of Solana and Cardano to become the seventh-largest crypto asset by that metric.

market talk

as mentioned, Terra is a relatively young cryptocurrency relative to its market cap, having been launched in January 2018. by comparison, Bitcoin has been around since 2009 and Ethereum since 2015. one of Terra’s direct-competitors in terms of the use-case as a global payments enabler, Ripple (XRP) has been around since 2012 but is currently embroiled in a lawsuit filed by the US SEC. the takeaway here is that the new kid on the block perhaps has plenty more eyeballs to catch and potential for expansion in usage than others that have been around for a while.

in terms of numbers, Terra, trading at a price of ~$94/token as of March 2, is around 10% below its lifetime high of ~$103/token. by comparison, Bitcoin is around 36% below its record of ~$68,500/token. if the latter continues its surge, which typically sees the broader market follow suit, the former might well be on its way to new records. given that meme coin Doge hit a market cap in excess of $50 billion last year, it would not at all be surprising if there’s a further 50% upside awaiting Terra.