Analysis of the surge in bankruptcy-related cryptocurrencies: Trading strategies for LUNA, LUNC, FTT, and USTC

TL;DR

Bankruptcy-related cryptocurrencies surged collectively, with LUNC leading the gains at +131% over 7 days, USTC at +75% in 24 hours, LUNA at +87% in 7 days, and FTT at a relatively modest +17%. The main catalysts were the Terra Classic v2.18 upgrade (December 8th), the Do Kwon sentencing (December 11th), the massive burning of LUNC, and viral spread on social media. Technically, all assets are severely overbought (RSI 84-89), with derivatives open interest surging by 29-190%, indicating a very high risk of a short-term pullback. Recommendation: Be cautious about short overbought assets; wait for a pullback to key support levels before considering short-term long, and avoid chasing the price higher .

Core Analysis

Market performance comparison

As of 02:25 UTC on December 7, 2025, the four major bankruptcy-related cryptocurrencies showed divergent trends:

Key observations :

• LUNC performed the best , leading the gains over 7 days, and its market capitalization rebounded to $350 million.
• USTC saw a single-day surge , with a 75% increase in 24 hours, outperforming other stocks.
• FTT's gains were relatively modest , lacking specific catalysts in December, and mainly relying on the lingering effects of SBF's tweets in September.
• Differences in circulation rates : LUNC has high circulation (85%) vs. LUNA has low circulation (60%), affecting supply elasticity.

Catalytic Factor Analysis

Terra Eco-Catalyst (LUNA/LUNC/USTC) :

1. Technical Upgrade : Terra Classic v2.18 network upgrade is scheduled for December 8, 2025, fixing the IBC vulnerability. Binance has confirmed support and has suspended deposits and withdrawals.
2. Legal Case : Do Kwon is scheduled for sentencing on December 11, 2025. US prosecutors are seeking a 12-year sentence to bring an end to his 2022 collapse.
3. Supply shock : LUNC has burned 849 million tokens in the past 7 days, and a total of 959 million in December (1.2% transaction tax mechanism), creating deflationary expectations.
4. Social Media Viral : CoinDesk reporter Ian Allison's Terra T-shirt at a Dubai event sparks a nostalgia frenzy, with Twitter buzz surging 71-126%.

FTT Independent Logic :

• The price broke through $0.69 to a high of $0.7377, with a surge in trading volume accompanied by a bullish engulfing pattern.
• Lacking news in December, the focus was mainly on the lingering effects of SBF's "gm" tweet in September and progress on creditor repayments.
• No new partners or stock exchange listings

On-chain analysis

Holder distribution

LUNC High Concentration Risk :

Risk warning : The top 10 addresses control 80% of the circulating supply, exchanges dominate pricing power, and retail investors are vulnerable to market crashes.

USTC is extremely concentrated :

The top 10 addresses hold 90% of the supply (185 million USTC), with the top 3 addresses accounting for 58%. In the past 7 days, the top 1 address reduced its holdings by 2.04 million and the top 6 address reduced its holdings by 2.41 million, indicating that large holders are taking profits and leaving the market.

FTT/LUNA are relatively scattered :

• FTT: Solana Chain 7,245 holders, no single large holder exceeding 1%.
• LUNA: A community governance model with high participation and low concentration in staking.

Trading activities

• LUNC : 24-hour trading volume of $100 million (mainly through exchanges), 100-200 on-chain transfers per day (staking + burning).
• LUNA : 24-hour trading volume of $318 million (+25%), with medium TPS supporting the dApp ecosystem.
• USTC : 24-hour trading volume of $57 million, low on-chain activity, and tied to the LUNC ecosystem.
• FTT : 24-hour DEX trading volume was only $0.78, with 8 small transactions, indicating a depletion of on-chain liquidity.

Social sentiment analysis

Narrative Theme

The market has categorized these four tokens as "zombie coins" or "bankruptcy concept coins," directly linked to the collapse of the Terra stablecoin and the FTX bankruptcy. Their recent surge is driven by legal solutions and community revival efforts.

Core narrative :

• Community-Driven Renaissance (LUNC/Terra): Token Burning + Network Upgrade Amplify the Countdown Effect of Do Kwon's Sentencing
• Bankruptcy Reorganization Beneficiary (FTT): FTX Debt Repayment Progress and Platform Restart Potential Support Valuation
• Event-driven speculation : Legal rulings (SEC/restructuring plans) trigger short-term momentum in tokens of defunct projects.

Opinion Leaders' Views

Overall polarity : As of December 7, 2025, sentiment leans bullish , but there are doubts about the sustainability of the hype, and a warning is that the social media-driven rally may come under pressure due to capital outflows and resistance levels.

Technical Analysis

Price Trends and Indicators

LUNA - Overbought Warning Across Multiple Timeframes :

Key price levels : Support at 0.1188 (1-day Bollinger Band upper band) / 0.1096 (SMA50), Resistance at 0.1455 (4-hour Bollinger Band upper band) / 0.1376 (SMA200)

LUNC - Extremely overbought but supported by MACD :

Key price levels : Support at 0.00005654 (1-day upper Bollinger Band) / 0.00005735 (1-hour lower Bollinger Band), Resistance at 0.00007909 (4-hour upper Bollinger Band)

FTT - Bullish momentum but below long-term moving average :

• 1-hour chart : RSI 62.28, MACD positive histogram, support at 0.6560.
• 4-hour chart : RSI 72.66 (near overbought), MACD positive bars, resistance at 0.6943.
• 1-day : RSI 58.28 (neutral), price below SMA50 (0.7210) and SMA200 (0.8577), upside potential limited.

USTC - Extremely Overbought Alert :

Derivatives Market

Position size and funding rate (2025-12-07 02:26 UTC):

Key signal :

• The 190% surge in USTC holdings indicates extremely active speculative activity and a sharp increase in liquidation risk.
• Negative funding rates are widespread, with short sellers consistently paying long positions, reflecting a bullish market but also excessive leverage.
• LUNC/LUNA short positions were liquidated at a rate of 64-66% , providing short-term support for prices, but long positions face a cascading liquidation when the trend reverses.

Trading Setup Recommendations

Short settings (priority sorting) :

1. Short USTC - Risk/Reward: 0.77 (Moderate)

   • Entry price: $0.01232 (current price)
   • Target: $0.01048 (1-day Bollinger Band upper line)
   • Stop loss: $0.01470 (1h upper Bollinger Band)
   • Reason: The 4-hour RSI is extremely overbought at 88.94, and the 190% surge in open interest is unsustainable.

2. Short LUNA - Risk/Reward 1.72 (Good)

   • Entry fee: $0.1357
   • Target: $0.1188 (1-day Bollinger Band upper line)
   • Stop loss: $0.1455 (4-hour upper Bollinger Band)
   • Reason: 1-day RSI is 84.09, indicating overbought conditions across multiple timeframes, and the MACD histogram is negative (1h).

3. LUNC - Wait and See - Risk/Reward 0.39 (Poor)

   • Short is not advisable at present. The MACD is bullish, and a reversal is expected after breaking through the 0.00007909 resistance level.

Long setup (enter after pullback) :

1. Buy LUNC on pullback - Risk/Reward 4.96 (Excellent)

   • Waiting for a pullback to the $0.00005735 support level.
   • Target: $0.00007909, Stop Loss: $0.00005297
   • Probability: Medium to high (technical resonance after pullback)

2. FTT Trend Following - Risk/Reward 1.00 (Average)

   • Entry: $0.7005 (current), Target: $0.7449, Stop Loss: $0.6560
   • Risk: If the price falls below the 1-day SMA50/200, upside potential is limited.

3. USTC Aggressive Buy The Dips - Risk/Reward 2.30 (Excellent)

   • Waiting for a pullback to the $0.01164 support level.
   • Target: $0.01470, Stop Loss: $0.01031

in conclusion

Short is the primary strategy; long with caution .

1. Short immediately : USTC and LUNA are technically severely overbought (RSI 84-89), and derivatives positions are abnormally inflated (USTC +190%). A short-term pullback is highly probable. It is recommended to short with a small position to key support levels.

2. Wait for a pullback to long : If LUNC pulls back to $0.00005735 and FTT holds above $0.6560, consider long in the short term, but a strict stop-loss is necessary to avoid a trend reversal after the social media hype cools down.

3. Avoid chasing high prices : Currently, all four major stocks are in overbought territory. After the catalysts (upgrade on December 8th, sentencing on December 11th) are realized, there is a high risk of "sell the news" selling pressure, and new entrants will face significant risks of being trapped.

4. Core risks :

   • High concentration (80-90% held by the top 10 addresses of LUNC/USTC) leads to the risk of a market crash.
   • Negative funding rates suggest excessive leverage among long positions, and a liquidation stampede could trigger a market crash.
   • Fundamental shortcomings : All four projects are already defunct ecosystems, lacking any real value support and purely speculative.

5. Time window : After the event-heavy period from December 8th to 11th, if there are no new catalysts, valuations are expected to return to rationality. It is recommended to close all positions before mid-December.