- RUNE’s debt crisis sparks fears of a “death spiral,” echoing Luna’s collapse, as analysts warn of unsustainable inflationary risks.
- THORChain faces backlash over reduced validator rewards, with investors losing faith as RUNE’s value plunges over 82% since Dec 2024.
- Technical indicators confirm a bearish trend, with strong resistance and high selling pressure suggesting further declines
Robert Sasu recently compared THORChain’s RUNE to Terra/Luna, highlighting similarities in their financial structures. He noted that RUNE’s model initially resisted crashes better than Luna’s. However, he warned that continuous minting to sustain debt mirrors inflationary policies. Ultimately, he stated, such systems often lead to a catastrophic “death spiral.”
RUNE’s Debt Crisis Raises Concerns
Crypto analyst Crypto Nikko pointed out that RUNE is currently insolvent. The platform owes over $200 million, while its market cap stands at only $450 million. To repay its debt, THORChain would need to sell nearly 50% of RUNE’s total supply at its current price. However, such a move seems impractical, given current market conditions.
Besides, the latest proposal drastically reduces validator revenue, which is receiving backlash. Many investors were shocked that THORChain did not anticipate this crisis earlier. Nikko, who has traded RUNE since it was $1.5, expressed disbelief at its decline. Since December 10, 2024, the token has plunged by over 82%, further damaging investor confidence.
Technical Analysis Signals Further Decline
The latest technical analysis on RUNE indicates a prolonged bearish trend. Initially, RUNE experienced a steep price increase, reaching a peak before consolidating. However, after brief upward movements, the token faced strong resistance, leading to a sharp decline.
Source: Crypto Nikko
Two key resistance points, highlighted on the chart, played a crucial role. The first rejection led to a downward move, followed by another failed attempt to break resistance. Consequently, RUNE suffered a significant drop, falling below crucial support levels.
A red-shaded area marks a steep 32.22% decline over 165 days. Additionally, the high trading volume of 1.3 billion suggests sustained selling pressure. Market sentiment remains bearish, with the MACD indicator confirming downward momentum. The MACD line has crossed below the signal line, with histogram bars in negative territory, reinforcing the downtrend.
RUNE’s market structure currently exhibits strong bearish momentum. Moreover, the recent proposal reducing validator rewards has exacerbated concerns. Consequently, many investors remain skeptical about THORChain’s ability to recover from this financial crisis.
