Robert Steinadler, 10 months ago
Some say that Do Kwon is singlehandedly pumping Bitcoin’s price up by buying BTC. Others just believe that earning 19 % interest on UST deposits using the Anchor protocol is just enough to tackle this year’s inflation. In any case, the LUNA token set an all-time high today and it is remarkable what this particular protocol achieved so far.
Why is Terra building a BTC reserve? And what is driving LUNAs price up, despite the market is still going through difficult times?
Terras protocol allows burning LUNA in return for UST, the native US-Dollar stablecoin on the Terra blockchain. Algorithmic stablecoins are not a new idea. They are backed by the value of an asset and not by an actual US-Dollar deposit that is held by a centralized entity.
But such a system isn’t absolutely fail-safe and that is where the Luna Foundation Guard comes into play. According to a report from Bloomberg, the foundation bought over $1 billion worth of Bitcoin since January. The idea is to build a fund that adds additional value to Terra’s ecosystem and keeps the value of UST always pegged to the US-Dollar.
Hence the rumour’s that Do Kwon, both founder and CEO of Terraform Labs and the Luna Foundation Guard is responsible for the recent hike in Bitcoin’s price. Yet, it remains open if the additional demand has such an effect. It is not impossible but unlikely because the Bitcoin market has become robust and has enough liquidity. That being said, $1 billion over three months is not enough to move the market in any direction but might have been enough to strengthen bullish sentiment with other investors.
In the meantime, LUNA the native token to the Terra blockchain is printing an all-time high. Of course, it isn’t that far away from the previous high but nevertheless, it is a new record. LUNAs performance was remarkable in the first quarter in 2022.
The market came down due to fact that Fed was changing its policies and the beginning of the war in Ukraine has done damage, too. Offering a digital and decentralized equivalent to cash that bears fruit with 19 % annual interest was exactly what investors were looking for. In uncertain times that might create an opportunity to buy back cheaper at a later point UST was in hindsight the right choice.
The price of LUNA is closely connected to the demand for UST. It remains to be seen if Terra manages to become a pillar of decentralized finance and associated protocols. Should they succeed, this would create a strong signal that the current trend is going to continue.
Jan 27, 2023
Floki's Decentralized Autonomous Organization (DAO) will vote on a proposal to burn (remove from circulation) $55 million worth of FLOKI. If this proposal passes, some 4.97 trillion FLOKI tokens in the Floki bridge will be burnt.
Jan 25, 2023
Bull markets are easy. Every crypto asset is in the green and the investment thesis becomes closely connected to the overall sentiment and narratives. However, things are different in a bear market, with one exception. Aptos reached an all-time high in January and went on into price discovery later. While every other crypto is recovering from crushing losses, Aptos is pumping.
Jan 25, 2023
Whale watching is not only a sport in crypto, but a legitimate strategy to get a better grasp on how or why the market is moving in a certain direction. We have done a little bit of work for you, and found something very interesting about an entity controlling a vast amount of Shiba Inu (SHIB) tokens.
Jan 23, 2023
It has been silent around Cardano for quite some time. Most investors were distracted from the bear market and didn’t notice that further refinements came in and IOG as well as the community kept building in the background. It was yesterday when that silence was broken and a wave of confusion rolled all over the Cardano community.