Terra Classic 1.2% tax credit supports the bullish outlook, but there is a problem

TERRA CLASSIC [LUNC] I’ve had a very exciting time the past few days getting close to executing a major milestone. Since the May crash, the community has expressed concern about the oversupply of LUNCs in the market. The 1.2% tax aims to solve this problem.

Unfortunately, many LUNC traders and potential traders may not understand what the 1.2% tax means, so here’s a brief explanation. All LUNC transactions across the chain will be subject to a 1.2% tax. This includes wallet interactions and smart contracts. But LUNC trades on stock exchanges may not qualify for tax.

The idea behind the tax is that it should contribute to reducing the excess supply in LUNC. One major downside is that it will make Terra Classic cross-chain transactions more expensive.

The price community is willing to accept this trade-off in favor of a deflationary outcome. It remains unclear whether potential projects looking to launch their protocols on Terra Classic will find this a challenge.

LUNC . missile

LUNC delivered a strong bullish performance this week likely due to the 1.2% positive tax response. Such actions will significantly reduce oversupply and this will have a positive effect on price action in the long run.

The coin has gained nearly 160% in the past seven days. This upside was enough to put it deep in the overbought territory and therefore the current bearish view in the near term.

Source: TradingView

Krypton is already down 16.77% at press time, confirming that profit taking has already begun after overbought conditions.

However, its downside may be limited since the mechanisms of taxation and burning actually encourage a lot of capital injections at lower price levels.

Additionally, LUNC is currently experiencing an influx of social size. This has been the case for the past couple of days, which indicates that more and more traders are paying attention to what is happening.

Such an outcome may encourage further accumulation of LUNC and mitigate its downside as there is now a strong incentive for long-term rally.

Source: feeling

Terra Classic weighted sentiment gauge is looking to improve significantly in favor of the bulls. This development may push LUNC into a strong accumulation phase now that investors are starting to prepare for the network.

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