In the last 24 hours, the digital asset that appreciated the most among the 100 largest cryptocurrencies by market value was the ANC, a token from the DeFi Anchor Protocol platform, built on the Terra blockchain.
In this period alone, the asset’s price jumped more than 16%. But the rise is not momentary. In fact, it has been under construction for the last 30 days, during which time ANC has jumped over 200%.
About Anchor Protocol (ANC)
ANC is the governance token of the Anchor Protocol decentralized money market, which offers depositors of the UST – a dollar-pegged stablecoin on the Terra blockchain – an annual yield (APY) of 20%. In addition, it allows users to secure UST loans using linked LUNA (bLUNA).
In this way, the protocol creates demand for UST which, in turn, removes LUNA tokens from circulation, boosting their price.
Today, Anchor is the most popular protocol in the Terra ecosystem, whose total locked value exceeds $23.14 billion. According to data from the DeFi Llama platform, Anchor accounts for 49.80% of Terra’s total TVL. That is, US$ 11.52 billion.
Correlation with Terra (LUNA)
As cryptocurrency analyst Yashu Gola highlighted, the ANC bullish move mainly started after price rallies across the cryptocurrency market. However, the ANC token gained momentum in late February, reflecting bullish movements in Terra (LUNA).
“Notably, the correlation coefficient between ANC and LUNA has risen from 0 on Feb 23 to 0.91 on March 3, meaning the Anchor Protocol price has more or less mirrored the movements of the Terra blockchain native token. ”
How reported Cryptheory, the price of LUNA and the use of the Terra blockchain have soared after Luna Foundation Guard (LFG), a non-profit organization that supports the ecosystem, announced that it has secured $1 billion to establish a decentralized reserve for its stablecoin UST.
In response, the price of LUNA rose by almost 90% and the ANC received the positive reflexes of this.
Is the ANC overheated?
While the outlook is bullish for Anchor, analyst Yashu Gola believes the token is overvalued, according to a key momentum indicator.
“The ANC’s daily relative strength index (RSI) readings came close to 80. This makes the token technically ‘overbought,’” he explained.
Gola also said that traders normally find opening new bullish positions extremely risky when the RSI goes above 70. Thus, they prefer to sell the asset to secure interim profits.
So, if there is a sell-off, the next ANC support level will be $4. Meanwhile, a further decline could bring the ANC’s 20-day exponential moving average closer to $3.14.
On the other hand, an added advantage can make the ANC reach $5.50. In this case, it would be up more than 20% from the current price.