LUNA and AVAX both has shed 50% from their recent highs.

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Bitcoin and Crypto Market Watch Monday, May 09, 2022 - 19:20

In this new series, we compare some key crypto assets and how they have fared recently. WE also analyze what’s ahead for the tokens in the immediate future. Today, we aim to compare Terra (LUNA) and Avalanche (AVAX), both layer 1 blockchains.

Terra (LUNA)

Terra is a public blockchain protocol that supports a thriving ecosystem by utilizing decentralized stablecoins. The Terra blockchain serves as the foundation for a DeFi ecosystem that generates stablecoins. The native tokens of the Terra network are Luna (LUNA) and TerraUSD (UST) both part of the top 10 cryptocurrency list as on date.

Terra employs LUNA to maintain stablecoin prices. Terra incentivizes trading between Luna and UST to maintain its peg. Terra uses a Proof-of-Stake model. Validators in this model verify transactions based on the number of coins they own. Validators and delegators can earn rewards by staking LUNA. In the middle of the Ukraine crisis, when most cryptocurrencies showed a bearish performance, LUNA attained its all-time-high of $119.

LUNA Technical Analysis

Source: TradingView, Binance

After a blinding rally that took it from under $50 to $120 within two months, LUNA has shed half its value and currently trades around $60. It is situated at a long-term trendline stretching from August 2021, which also coincides with the .618 retracement of its run from $23 to $120. This is a significant confluence, but given the current market conditions, LUNA may lose this support. Fortunately for LUNA, another long-term trendline from October that has been well respected is situated right below, around the $53-55 level. With a depleted RSI indicator, LUNA may reignite interest in the bulls at this level and make a push for the $60 level again.

However, if Bitcoin (BTC) continues to be bearish, LUNA may reject, form a lower high and continue downward to $47, key support tested on several occasions in the past. Over the next 6 months, we can expect range-bound price action for LUNA as BTC consolidates around the $30,000 range before pushing for newer highs.

Avalanche (AVAX)

Avalanche is another blockchain platform that is emerging well as a competitor to Ethereum Through its Avalanche Consensus Protocol, Avalanche promises to combine fast transactions and a highly scalable trading experience. It can process up to 4,500 transactions per second. The Avalanche Consensus Protocol also brings together the advantages of two other consensus protocols, Classical and Nakamoto. The native token of Avalanche is AVAX. It is the 13th largest cryptocurrency, with a market capitalization of $13 billion. AVAX works as the basic unit of account between Avalanche's multiple subnets.

Avalanche users require AVAX to pay network transaction fees. Unlike Ethereum, where the gas fee is partially burned and partially paid to miners, Avalanche's fee is completely burned.  Avalanche uses a Proof-of-Stake consensus. AVAX holders must stake their coins to validate AVAX transactions. The users who have the most staked AVAX coins and actively participate as validators are more likely to be chosen as validators for new Avalanche blocks. The users also need to hold AVAX to have voting rights on Avalanche governance proposals.

AVAX Technical Analysis

Source: TradingView, Binance

AVAX rose from $50 to over $140 in late 2021 and has retracted the gains in the last week of April. AVAX, too, has a depleted RSI (relative strength) indicator, which means it may hold this key level. Even if lost, it is unlikely to drop the next high-time frame support at $32. Instead, it may retest the $50 level from below and hopefully remain range-bound or even reclaim it, depending on Bitcoin’s price action. The last time AVAX was at this level with the same RSI, it triggered a nearly 3x rally that took it to its all-time high.

LUNA or AVAX - Which coin will bounce soon?

Both Terra and Avalanche are Layer-1 blockchains. With Luna Foundation Guard's announcement to acquire AVAX tokens worth $100 million, the overall stablecoin reserve in crypto is expected to get a boost. Both LUNA and AVAX use the Proof-of-Stake consensus model. Both the coins have so far shown huge potential to emerge as promising altcoins of the future. However, we believe LUNA has much to shed further whereas AVAX will be range bound and, therefore, likely to push higher faster.

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Disclaimer: This article was authored by Giottus Crypto Exchange as a part of a paid partnership with The News Minute. Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.

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