Can “Bankrupt Tokens” Bounce Back? LUNA / LUNC / USTC / FTT Unexpected Rally — Opportunity or Bull Trap?

Following the tumultuous collapse and ecosystem breakdown in 2022, former flagship crypto assets like LUNA, LUNC, USTC, and FTT earned the “bankruptcy cryptocurrency” label—few investors dared to touch them. Yet, in a surprising turn, several of these bankruptcy tokens have recently staged notable rebounds.

Background Review: From Peak to Collapse

LUNA and UST (later renamed USTC) were once the backbone of the Terra ecosystem, developed by Terraform Labs. UST maintained a peg to the US dollar, while LUNA supported its stability and liquidity. In May 2022, UST lost its peg and investor confidence collapsed, triggering a rapid depreciation in LUNA that nearly wiped out its value. LUNC, the legacy chain token, and USTC (formerly UST) both plunged into obscurity. FTT also became synonymous with bankruptcy after the FTX exchange imploded. Most believed these tokens had no chance of recovery.

Recent Rally — Data and Catalysts

Chart: https://www.gate.com/trade/FTT_USDT

Market activity has surged recently. In just 24 hours during early December 2025:

• LUNC soared by roughly 88.88%
• LUNA jumped nearly 43%
• USTC climbed about 29.6%
• FTT advanced approximately 15%

Some reports indicated LUNA’s single-day gain reached 39%. Analysts attribute this momentum to speculation around “bankruptcy concept tokens,” despite no fundamental improvements. For USTC and LUNC, token supply reductions via large-scale community-driven burns have been executed to decrease circulation and create scarcity.

Underlying Drivers: What’s Fueling the Rally?

This rally stems from several key factors:

• Speculation and sentiment: Many traders treat these bankruptcy tokens as “cheap bets,” hoping to profit from synchronized sentiment or community-driven hype. On social media and crypto forums, narratives like “bankruptcy token revival” and “rebuilding from ruins” spread quickly.
• Supply-side dynamics: Ongoing token burns reduce circulating supply, theoretically increasing scarcity and supporting price appreciation. For the USTC and LUNC communities, this represents a “rebirth” strategy.
• Market mechanisms: Some exchanges have relisted or resumed support for these tokens, and launched futures or derivatives trading. These moves can drive short-term capital inflows and trading volume spikes, boosting prices.

Hidden Risks and Red Flags

Despite the rally, significant risks persist:

• Absence of fundamental support. Unlike healthy growth drivers such as new protocol launches, partnerships, or technical upgrades, these tokens currently lack mechanisms for real value creation. Their rise is fueled by speculation and market expectations, not substance. Many analysts remain skeptical about LUNA’s surge.
• Extreme volatility. Impressive gains today can be erased by sharp declines tomorrow. For risk-averse investors, these assets resemble gambling rather than investing.
• Uncertain community and governance. Proposals to re-peg USTC to LUNC, for example, face technical, trust, and regulatory hurdles—even if supported internally. The prospects for a near-term “peg revival” are slim.
• Market sentiment is highly vulnerable to hype and rumors. This “community-driven speculation” model results in unstable prices, and when enthusiasm fades, severe price drops can follow.

Investor Decisions: Buy, Short, or Wait?

If you have a high risk tolerance, sufficient capital to absorb major swings, and can accept the worst-case outcome, you may treat LUNA, LUNC, USTC, and FTT as “high-risk speculative assets.” Allocating a small portion for short-term trading could yield outsized returns. However, always set strict stop-losses and never consider these tokens as “long-term value investments.”

If you prefer stability and prioritize fundamentals and sustainable growth, these tokens currently lack compelling logic, and long-term holding carries substantial uncertainty. Waiting on the sidelines may be the wiser choice.

Conclusion and Recommendations

Bankrupt crypto assets have staged a dramatic comeback, which may seem miraculous. However, do not be swayed by short-term price surges and community hype. These tokens lack sustainable ecosystems and genuine value support—their rallies are temporary, driven by sentiment and artificial scarcity.

If you choose to enter this extremely high-risk market, treat it as you would a gamble—commit only what you can afford to lose, and never view it as a “sure win” or “safe investment.” Do your own research and exercise maximum caution.