Anchor Protocol price prediction: Can ANC survive?
The troubling history of Anchor Protocol has left investors bearish over its native ANC token with it recently stooping to its all-time low
ANC, the cryptocurrency of Terra’s flagship decentralised finance (DeFi) platform, Anchor Protocol, crashed in early May after the depegging of the algorithmic stablecoin TerraUSD (UST).
There has also been uncertainty over the future of ANC since Terra forked into a new chain without its fallen stablecoin. Terra’s plan to leave out UST from its new chain has raised questions about the viability of the Anchor Protocol, whose main offering was its near 20% interest returns on UST deposits.
As expected, the price of ANC has struggled since the collapse of Terra and was down 39% over the past month, at the time of writing.
What is Anchor Protocol and its native token ANC?
Anchor is a savings protocol, built on the Terra blockchain, that aims to offer low-volatile yields on UST deposits. The platform was launched by Terraform Labs on 17 March 2021.
Anchor Token (ANC) is the protocol’s native and governance token. Tokens can be deposited to create new governance polls, which can be voted on by users staking ANC. ANC tokens are also issued to reward borrowers. Anchor’s website said:
How does Anchor Protocol work?
According to its website, people can borrow UST by using cryptocurrencies such as LUNA and ETH as collateral. Anchor Protocol is also designed to offer returns as high as 20% to lenders or depositors on their UST deposits.
Anchor Protocol’s market-beating UST deposit returns attracted yield-chasing investors, as total value locked (TVL) on the protocol rose to more than $17bn by early May 2022, data from DeFi Llama showed.
Anchor Protocol quickly emerged as a top DeFi platform in the blockchain sector, in terms of TVL, alongside the likes of the Ethereum-based protocols Aave and Curve in 2022.
Collapse of Terra
As UST started depegging between 7 May and 8 May, Anchor Protocol saw its deposits drop about 20% in the span of two days. Capital flight from Terra’s ecosystem ensued while UST, LUNA and ANC prices crashed in the days that followed.
By the time the dust settled, TVL on Anchor Protocol had sunk from an all-time high of $17.15bn on 5 May to below $30m on 31 May.
Today (as of 29 November), Terra has hard forked into a new chain without UST. Anchor Protocol’s future looks bleak. The savings protocol’s dependence on UST for its borrowing and lending operations makes the once-thriving platform at risk of being left out of Terra 2.0’s plans.
How dependent is Anchor Protocol on Terra’s algorithmic stablecoin, UST? Weeks before the crash, 72% of UST’s total circulating supply, then worth about $13.15bn, was locked in the Anchor Protocol alone. Moreover, Anchor Protocol’s high stablecoin yields were only open to UST deposits.
What does Terra 2.0 mean for Anchor Protocol?
After the collapse of the algorithmic stablecoin UST, Terra was in a limbo as investor confidence in the ecosystem hit rock bottom.
Terra’s native token, LUNA, which once sat among the top ten most valuable cryptocurrencies, slumped more than 99.9% from its record high of $119.18, hit in April 2022, to trade at about $0.083, as of 31 October.
On 26 May, Terra’s community passed the Terra ecosystem revival proposal, with 65.5% of participants voting to create a new blockchain without UST.
According to the plan, the new chain will be called Terra, while the old chain will be known as Terra Classic. New LUNA2 tokens will be airdropped to Luna Classic stakers, Luna Classic holders and UST holders.
3/ It will effectively create a new Terra chain without the algorithmic stablecoin. The old chain will be called Terra Classic (token: $LUNC), and the new chain will be called Terra (token: $LUNA). The chain upgrade will commence a few hours after the Launch snapshot.
— Terra ???? Powered by LUNA ???? (@terra_money) May 25, 2022
The plan also put out a list of “essential apps” whose developers would receive funding and support for building on Terra’s new chain. Anchor Protocol was not mentioned in the list of “essential apps that must exist in any Web 3.0 ecosystem to be viable”.
Users on Anchor Protocol’s official forum then complained about its website “not working” and being unable to withdraw their collateralised assets. Some voiced concerns about Anchor Protocol’s customer support.
Many questioned if Anchor Protocol will exist on the new Terra Chain. A user named Sabri asked: “Will $ANC token and Anchor Protocol migrate to Luna 2.0?” User s_ice wrote in the same thread: “Same question here, and I can’t find any answer.”
Anchor Protocol has not put out any update regarding its future on its website and on Twitter.
It did tweet on 8 June that the community passed a proposal to freeze the platform’s earn and borrow functions, saying:
Anchor Protocol token (ANC) price analysis
Anchor Protocol’s ANC token launched via an initial decentralised exchange offering (IDO) on 16 March 2021 at an opening price of $0.05. By 19 March 2021, ANC surged to an all-time high of $8.31, data from CoinMarketCap showed.
According to the price chart, ANC saw strong gains in the first quarter (Q1) of 2022 as more investors deployed their capital in the Terra-based savings protocol. However, ANC was unable to build on this momentum as investor sentiment turned sour on the back of global monetary tightening pressures.
ANC plunged to an all-time low of $0.0504 on 13 May 2022.
ANC/USD price chart, all-time performance
Source: CoinMarketCap
Recent news
The FTX cryptocurrency exchange announced on 6 September that it was delisting ANC from its platform. The token was removed from its spot and future markets on 12 September, with deposits and withdrawals also being suspended.
It unusually rallied after this announcement and reached a high of $0.21 on 10 September. But it soon dropped from this high and fell to a $0.077 on 21 October.
There was more bad press for the Anchor Protocol. The judicial manager Hodlnaut, the bankrupt cryptocurrency lender, said it had lost $189.7m because of its exposure to Terra through Anchor Protocol.
Hodlnaut had a “significant amount” of funds in Terra’s UST stablecoin, with a large number of it staked on the Anchor Protocol.
Unable to escape the bearish trend, ANC has recently stooped to its all-time low of $0.045 on 9 November. This followed the wider crypto crash after FTX announced its bankruptcy.
While anchor protocol has recovered slightly, it has been trading sideways in recent weeks. As of 29 November, the cryptocurrency was trading at $0.05 and was down 39% over the past month.
Anchor Protocol price predictions for 2022, 2025 and 2030
As of 29 November, Coin Codex’s short term ANC crypto price prediction saw the token falling by 35% to a target price of $0.033 on 29 December. Coin Codex said that technical indicators showed sentiment for ANC was “bearish”, with 22 indicators showing bearish signals and only two indicators showing bullish signals, while the fear and greed index indicated “fear” among ANC investors.
Wallet Investor’s Anchor Protocol price prediction for 2023 expected ANC/USD to have fallen to $0.003 in a year. Its five-year ANC price prediction suggested the token could plummet to an average price of $0.0006 by November 2027.
Price Prediction’s ANC price prediction suggested that the coin could climb back to an average price of $0.057 in 2022. Its longer-term forecast was bullish, with its Anchor Protocol price prediction for 2025 giving an average price of $0.17.
DigitalCoinPrice’s ANC crypto price prediction expected ANC to trade at an average price of $0.063 in 2022. Its anticipated steady growth for the cryptocurrency. The site’s Anchor Protocol price prediction for 2030 gave an average price of $0.73.
When looking at ANC coin price predictions, you should remember that cryptocurrency markets are very volatile. Algorithm-based forecasts and analysts’ expectations are based on past performance, which never guarantees future results. Predictions can be wrong and change in a matter of hours.
You should do your own research, build your own outlook for ANC and base your decision to trade according to your risk tolerance and trading goals. And never trade money you cannot afford to lose.
FAQs
Is Anchor Protocol a good investment?
As of 29 November, ANC had lost more than 99% of its value year-to-date on the back of Terra’s collapse in May 2022. It is yet to be seen what the future holds for the token. You should do your own research and base your decision to trade ANC according to your risk tolerance. And never trade money you cannot afford to lose.
In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether the ANC token is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. And never invest money that you cannot afford to lose.
Should I invest in Anchor Protocol?
ANC prices crashed alongside UST and LUNA in May 2022 after the depegging of algorithmic stablecoin and capital flight from the Terra ecosystem. Anchor Protocol’s future remains uncertain after Terra hard forked into a new chain and abandoned UST in the process.
Whether you should invest in Anchor Protocol is a question that you will have to answer for yourself. Before you do so, however, you will need to conduct your own research and never invest more money than you can afford to lose because prices will go down as well as up.
Will anchor protocol price go up or down?
As of 29 November, the anchor protocol crypto price prediction from PricePrediction suggested that the token could pass $1 by 2030. But Coin Codex warned that the current sentiment was bearish.
In volatile cryptocurrency markets, it is important to do your own research on a coin or token to determine if it is a good fit for your investment portfolio. Whether ANC is a suitable investment for you depends on your risk tolerance and how much you intend to invest, among other factors. Keep in mind that past performance is no guarantee of future returns. And never invest money that you cannot afford to lose.
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