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Terra hits $ 100 after Solana and Avalanche rally

The central theses

  • Terra’s LUNA token hit an all-time high of $ 100 today.
  • LUNA’s bullish price action follows similar moves from Solana and Avalanche, two other Layer 1 projects.
  • The three tokens, collectively referred to as “SOLUNAVAX” by crypto traders, soared in 2021.

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Amid the ongoing hype about Layer 1 blockchains, Terras LUNA hit $ 100 for the first time. The asset’s price development follows a similar trajectory as Solana and Avalanche, both of which have risen sharply in recent months.

Terra reaches $ 100

Terra benefits from the Layer 1 hype.

The stablecoin-focused blockchain is home to one of the fastest growing DeFi networks with a variety of popular apps including Anchor Protocol, Mirror Protocol, Terraswap, and Astroport. Its native token, LUNA, is currently leading a Christmas rally in the market. It hit $ 100 for the first time today after rising over 50% in the past week. It has since cooled down and is trading at $ 96.53 at press time.

LUNA’s move up comes amid a period of bullish momentum in the market following Bitcoin’s rebound from $ 45,700 to $ 51,200.

Source: TradingView

On Monday, LUNA broke previous resistance levels at around $ 75 on the daily timeframe. LUNA has since encountered psychological resistance at $ 100.

Several recent developments have acted as catalysts for LUNA’s bullish momentum. While LUNA has risen, the total value locked on Terra has exceeded $ 21 billion, aided in part by the Astroport exchange’s ongoing token lockdrop. Terra now holds the second highest total value locked in DeFi, trailing just behind Ethereum.

LUNA’s price trend exactly followed that of two other Layer 1 coins: Solanas SOL and Avalanches AVAX. Both SOL and AVAX also experienced a parabolic rally in the second half of the year, reaching new all-time highs in November. Ethereum’s soaring gas fees, generous token incentive programs, and the market’s growing confidence in a multi-chain future can all explain the rise in Layer 1 coins.

Layer 1 SOL AVAX LUNASource: TradingView

While several Layer 1 networks have grown in prominence in recent months, Terra, Solana, and Avalanche were three of the top performers in the last two quarters of the year. The trend has resulted in several traders coining the term “SOLUNAVAX” in terms of market strength and the rotations they have made between each coin.

Of the three, LUNA is the biggest winner of 2021. According to data from CoinGecko, it was trading at $ 0.65 on Jan 1st, meaning it was posting a 14,670% gain. Solana’s SOL is up 7,800%, while Avalanche’s AVAX is up 3,300% year-to-date.

Still, all three coins outperformed the two leading cryptocurrencies by a margin. Bitcoin is up around 76% this year while Ethereum is up 446%.

Disclosure: At the time of writing, the author of this article owned ETH, SOL, and other cryptocurrencies.

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