Terra’s native cryptocurrency, LUNA, may be on the verge of breaking new all-time highs, as Terraform Labs CEO Do Kwon affirms that the company would continue to add bitcoin stacks to its reserves.
Terra is on track to become Bitcoin’s largest holder
Terra, the fast blockchain competing with Ethereum, has recently captured the spotlight after the Luna Foundation Guard (LFG) announced plans to purchase billions of dollars in bitcoin as an additional security layer for its UST stablecoin.
On Wednesday, the Terra wallet added 2,943 BTC to its total stash, bringing it to 30,728 BTC worth approximately $1.45 billion. Notably, the LFG has not sold a single satoshi and has effectively exceeded the initial $1 billion target.
Do Kwon recently stated that the long-term goal is to create a massive $10 billion bitcoin fund to act as a release valve for UST redemptions during market downturns. Terra’s UST is currently the market’s fourth-largest stablecoin. It is pegged to the US dollar at a 1:1 ratio, and its creation is facilitated by the burning of LUNA. LFG has been purchasing bitcoin reserves with Tether (USDT).
The ultimate goal, according to Terra’s founder, is to become the world’s largest single bitcoin holder. This honor is currently thought to be held by Satoshi Nakamoto, the pseudonymous creator of Bitcoin.
Terra has been rapidly increasing its BTC holdings and may soon surpass Tesla’s, catching up with MicroStrategy after.
What this means for LUNA
Since LFG announced plans to obtain $10 billion BTC for reserves, LUNA has been on fire. The ninth-ranked cryptocurrency has essentially been breaking records after breaking records. And, as Kwon strives to make his Bitcoin coffers rival Satoshi’s, LUNA may be poised to soar.
To put it another way, accumulating a BTC reserve is a brilliant move that ensures that UST fluctuations are negligible during periods of high market volatility. Increased stability means increased demand for UST. This, in turn, significantly reduces the supply of LUNA and may serve as rocket fuel for the token. As of publication time, LUNA was trading at $103, a 3.86% loss on the day.