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The Rockaway Blockchain Fund (RBF) has released a report showing the bullish state of the Altcoin Terra (LUNA) and its growing ecosystem. According to the report, the project attracts great attention in the field of crypto, and its price reflects the hype created by a rally of 8,809% in the 1-year chart. At the time of writing, LUNA is moving sideways in lower and higher timeframes, trading at $ 16.67. The 30-month chart remains green and still shows 6.3% profit. But RBF believes there is still room for a major rally.

Altcoin LUNA forecast

RBF had made an estimate that by 2020 Terra and its ecosystem expected the price of its native token to rise to $ 5 by 2025. His predictions were left behind by a wide time span. Therefore, they set a new price target of $ 170 for the next 5 years. The main reason is the deflationary supply of LUNA. The higher LUNA price is due to a decrease in the LUNA token supply as well as the proportionally allocation of cash flow among less staked LUNA tokens.

Terra’s ecosystem is based on stablecoin supply (UST, KRT). Unlike Tether (USDT), USD Coin (USDC) and other similar assets, Terra’s stablecoin is decentralized and relies on a stabilization mechanism to fix its prices to the US dollar. This mechanism requires 1 LUNA to be burned for each UST or KRT printed. As the RBF report states, the mechanism works in both directions, and this could further increase the price of LUNA as Terra takes over a larger stablecoin market share.

Stablecoin supply

In April 2021, the total stablecoin supply was $ 75 billion. This figure represented an increase of 91% since January 2019. According to RBF estimates, the US dollar money supply has increased by 5% since 2000 and will reach $ 4.5 trillion by 2025. Stablecoins could make up about 20% of this future supply.

By then, Terra could own about 20% of the stablecoin market, with more significant growth than the rest of its competitors. RBF believes Terra could become the “leading stablecoin provider” in the same period. “In our model, we account for this supply reduction as cash flow to shareholders, because the net economic impact is similar. This predicted increase in the total stablecoin supply is the main value factor behind the LUNA token price. The past daily mint amounts (left axis) together with the cumulative IHR supply (right axis) are shown in the chart below. ” is trying.

Terra’s savings protocol can be Anchor’s main driver. Decentralized Finance was incredibly embraced last year. Trade is the main use case in this industry. However, RBF expects Anchor to become the dominant force over savings. Thus, Altcoin adds more burning pressure to LUNA. The report concludes:

We also believe that the LUNA token could be worth more than $ 170 as the supply of LUNA token decreases and the cash flow will be distributed among the less staked LUNA tokens. Investors investing in LUNA tokens can see another 10x increase in invested capital from their current valuation levels.

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