The LUNA price hits a new all time high as Terra becomes one of the most competitive Layer 1 solutions
- The LUNA price hit $ 47.29 in a price rally sparked by the Columbus-5 upgrade in the Terra ecosystem.
- Analysts expect the Ethereum alternatives LUNA, SOL, AVAX, FTM to continue to post steady gains in October.
- LUNA and competitor SOL noticed an increase in whale activity on cross bridges.
Terras Columbus 5 upgrade increased the deflationary pressure on the LUNA utility token of the platform by implementing a burn policy. The recent upgrade is the main reason for LUNA’s price rally.
LUNA hit a new all-time high at $ 47.29, while the correlation with Solana and Avalanche hit a high
LUNA, one of the two tokens in the Terra ecosystem, has seen an increase in daily trading volume since the Columbus 5 upgrade. The upgrade introduced a “burn policy” to permanently burn LUNA in conversion to Terra’s algorithmic stablecoin (UST).
The main purpose of Terra’s utility token was to supplement UST if its value fell below $ 1. The LUNA used for this was sent to the communal pool.
The Columbus 5 upgrade was a game changer as it meant that LUNA, which was used to supplement UST, was permanently burned. This will reduce the circulating supply of the token and increase deflationary pressure.
13 / Columbus-5 is just the beginning.
It lays the foundation for future waves of apps, protocols, builders, and users being integrated into the TeFi ecosystem – and wielding the power of decentralized money that is more attractive to spend and hold than the mainstream fiat companies.
– Terra (UST) Powered by LUNA (@terra_money) September 30, 2021
Historically, an increase in deflationary pressure and a decrease in supply will trigger a rally in the token. A closer correlation between UST and LUNA, along with the decreasing supply of the utility token, is expected to increase its price.
The following graphic shows the steady decline in the LUNA offer since the introduction of the Burn Policy in Columbus 5.
LUNA circulation supply.
LUNA hit a new all-time high of $ 47.29 today. The correlation of LUNA with its competitors, the Layer 1 scaling solutions Solana (SOL), Avalanche (AVAX) and Fantom (FTM), has increased continuously and reached a peak.
The correlation of LUNA with SOL and AVAX is 0.89 and 0.93, respectively. The updates to the Terra blockchain, which are having a bullish impact on the LUNA price, are expected to trigger a rally in the tokens of other Layer 1 solutions.
The pseudonymous cryptocurrency analyst and trader @AltcoinSherpa commented on LUNA’s rally in a recent tweet:
$ LUNA: Breaking all-time highs has some interesting implications:
-I expect others to do well on L1
-Alts will probably run a little longer before btc takes the throne
-Expect other L1s to do well, like AVAX, SOL, FTM # LUNA pic.twitter.com/QFY3liSRTg
– Altcoin Sherpa (@AltcoinSherpa) October 4, 2021
Based on a recent Spencer Noon report, engagement in the Terra network has increased. As can be seen in the graphics below, activity on the Terra Bridge is increasing.
Traffic on the Terra Bridge (in USD).
The report also notes an increase in activity on the Solana blockchain.
@LomahCrypto, an analyst at cryptocurrency trading group The Haven Crypto, wants LUNA to keep accumulating if the price drops.
The analyst announced in a recent tweet that he was waiting for the token’s offerings to continue to decline.
Imagine doubting a bullish setup in a bullish market.
Took some weight off at these local highs. As usual, I’ll try to increase all the $ LUNA dips.
In Columbus-5 we trust. pic.twitter.com/6tZRKkuzWT
– Loma (@LomahCrypto) October 4, 2021