Bankrupt Coins Make a Comeback: Risks and Opportunities Behind the Frenzied Rebound of LUNA and LUNC

LUNA’s price is currently hovering around $0.105, down 15% from the previous day. Meanwhile, its “twin” LUNC showed a completely different trend over the weekend, surging as much as 52.11% in 24 hours, with the price peaking at $0.0000815.

FTT and USTC exhibited diverging trends: the former fell 6.88% on December 8, while the latter dropped 20% within 24 hours.

01 Market Status: Collective Frenzy of Bankrupt Tokens

Cryptocurrencies once declared “dead” are staging a jaw-dropping resurrection. The remnants left behind by the collapse of the Terra ecosystem are now among the most actively traded assets in the market.

LUNC’s performance is particularly striking. According to data from December 5, its price on Gate soared 61.11% in a single day, reaching $0.00007. This surge stands out in an otherwise lackluster market.

Compared to LUNC’s madness, the new generation LUNA appears much more subdued. Its current price is $0.105, down 15% in 24 hours.

The once-glorious FTX exchange token FTT experienced a significant drop on December 8, falling 6.88% in 24 hours. USTC also joined the losers, tumbling 20% in 24 hours.

02 Panorama Analysis of Four Major Tokens

Different bankrupt tokens show drastically different market behaviors and technical characteristics. The table below compares key data for these four tokens:

The data shows that although these tokens originate from bankrupt projects, the market treats them very differently.

LUNC’s astonishing surge reflects speculative enthusiasm for such “zombie coins,” while LUNA’s relative stability may indicate investors remain divided on its long-term value.

03 Why Can Bankrupt Tokens Still Rise?

The crypto market is never short of perplexing phenomena, and the rebound of bankrupt project tokens is one of them. Behind this seemingly irrational market behavior, multiple logical drivers exist.

Market memory and residual brand value should not be underestimated. Even after a project’s bankruptcy, its former notoriety and community base leave behind “residual brand value.” LUNA and LUNC are still traded on about 26 exchanges, and this ongoing market presence provides a foundation for price fluctuations.

The speculative mentality triggered by low price per unit is another key factor. When LUNC’s price drops to $0.000054, such a low price easily gives investors the illusion of “huge upside potential,” attracting many retail speculators.

Supply-side changes driven by bankruptcy proceedings can also impact prices. For example, after Mt. Gox delayed its repayment plan, selling pressure on the market was reduced, which actually became one of the catalysts for Bitcoin’s price surge. Similar logic may apply to these bankrupt tokens.

Technical rebounds and short squeezes often follow extreme overselling, leading to price rises. When selling pressure is exhausted, any positive news or shift in market sentiment can trigger a short squeeze and quickly drive prices up.

04 Risks and Opportunities: Dancing on the Edge

Trading bankrupt cryptocurrencies is essentially a high-risk game. These tokens are far more volatile than mainstream cryptocurrencies—LUNC’s 52.11% daily gain and USTC’s 20% daily loss are prime examples.

Technical indicators show the market is already in a sensitive state. For instance, LUNA’s RSI-7 indicator has reached 70.26, which is in the overbought zone, suggesting the momentum for the current rally may be running out.

Liquidity issues may exacerbate volatility. LUNA’s market cap is only $75 million, but its 24-hour trading volume is as high as $250 million. This significant discrepancy means the market lacks depth, and large trades can easily cause wild price swings.

Weak fundamentals are a hard flaw for these tokens. USTC is nominally a stablecoin, but in reality, it’s more like a meme coin, supported only by the narrative of “returning to $1.” Such price action, detached from fundamentals, is usually unsustainable.

Regulatory and legal risks still exist. Terra founder Do Kwon still faces legal proceedings, and these uncertainties could impact token prices at any time.

05 How to Respond: Trading Strategies and Risk Control

In the face of abnormal volatility in bankrupt cryptocurrencies, it’s crucial to have clear trading strategies and strict risk control measures.

For conservative traders, it is advised to stay on the sidelines. The fundamental issues with these tokens remain unresolved, and price swings are driven more by sentiment and speculation than value discovery. LUNA’s 99.94% drop from its all-time high reminds us that these assets still carry huge downside risk.

For aggressive traders willing to take risks, it’s essential to strictly control your position size if you choose to participate. It’s recommended to keep such high-risk assets within 5% of your total portfolio, and use stop-loss orders to limit potential losses.

Technical analysis can provide some reference. Some analysts point out that USTC is consolidating around $0.0088, with a short-term rebound target of $0.0095 to $0.01. However, it’s important to note that the token once plunged from a high of $0.078 to around $0.0055, making it highly volatile.

Paying attention to key time points may help capture trading opportunities. For example, USTC plans to integrate with LUNA and LUNC on December 12, and such events may affect market sentiment and price action in the short term.

Regardless of strategy, avoid using high leverage when trading these highly volatile assets. The crypto market has seen over $19 billion in leveraged positions liquidated within 24 hours before—trading bankrupt tokens with high leverage is nothing short of gambling.

Outlook

On LUNC’s daily chart, a steep bullish candle reached an astounding 131% on December 5, while just three days later, USTC’s chart showed a deep 33.19% drop. These two wildly diverging paths intertwine on the screen, much like the unpredictable fate of these bankrupt tokens.

As Bitcoin reasserts itself as part of institutional asset allocation, the frenzy of these fringe tokens serves as a reminder that the crypto market still harbors untamed wildlands.