Terra Luna Saves the Crypto Market
Massive Bitcoin purchases by up-and-coming ecosystem project, Terra Luna, have injected life into the market. Neither this post nor any other on cryptofal.com should be taken as financial advice. It is not.
The crypto markets as a whole had been in a slump since November. The threat and subsequent start of the war between Russia and Ukraine further drove fear into the market. Everything was looking grim until Terra Luna stepped in and started buying large amounts of Bitcoin. They want to use BTC as the reserve currency for their stable coin US Terra (UST).
This is all a part of Terra’s long-term goal to buy more than $10 billion dollars for their reserve. For a stablecoin, like USDC or UST, there needs to be a reserve currency backing it. The fact that Terra is choosing to use BTC to back theirs instead of a fiat currency is a major win for Bitcoin. This opens the door for new monetary standards like the “Gold standard” was for the dollar before it became obsolete. If this works for Terra Luna then even more projects and companies will jump on the opportunity to do the same in the future.
The goal of the Terra Foundation is to make money as easily transferable as possible. They currently have many different fiat-pegged stablecoins such as the U.S. dollar, South Korean won, Mongolian tugrik, and the International Monetary Fund's Special Drawing Rights basket of currencies. Having all these make for simple and censorship-resistant payments that can be sent globally. This is what makes them different from an XRP or XLM. The price of these tokens is always stable because they are backed by a stable currency. The prices are not subject to fluctuating market conditions and they are just as efficiently sent across borders.
Terra making these big buys has forced a resurgence in the market that has resulted in BTC trading over $47k at the time of writing. Buys of this size will cause the price because it is also inflating the demand and volume of the token. Not to mention that this has also just pushed the price of the LUNA token to new all-time highs at $107. This has also caused an absolute spike in the fear and greed index which pushed us back into “greed” after a long period of “extreme fear. ”The Terra foundation wallet is currently holding 27K+ BTC or roughly $1.3B with no signs of stopping anytime soon.
They are not the only ones looking to buy more Bitcoin at the moment. Microstrategy has said that they will be buying even more. The subsidiary company, Macrostrategy, is taking a loan of $205 million to buy Bitcoin. The big buys are coming in heavy at the moment as they are the driving force for the comeback we are currently seeing. It’s nice to see that we have finally come out of crypto winter as crypto spring has brought on a lot of optimism in such a short amount of time.
