Terra, the blockchain known for hosting the Luna token, is considering creating Terra US (UST), a Bitcoin-backed stablecoin. To that end, Luna Foundation, the company behind the network, is making massive investments in the cryptocurrency to reach a total of US$10 billion in Bitcoin. It is for this reason, that in the last 24 hours, Terra soars and leads the uptrend in the cryptocurrency market.
This morning, the price of the Luna token reached an all-time high. The cryptocurrency rose 11% and remained in eighth place by market capitalization (behind Cardano, ADA). In afternoon trading, it still maintained upward momentum, rising 5.8% to US$106.64.
The rises are in response to Singapore-based Luna Foundation Guard (LFG) buying US$135 million worth of Bitcoins on Monday. Following these acquisitions, it has been confirmed that the management associated with the foundation is currently worth approximately US$1.32 billion in Bitcoins. As the Bitcoin blockchain and Terra’s blockchain are incompatible, the company must carry out a process of wrapping the Bitcoins.
Put simply, a wrapped token is a token that represents a cryptocurrency from another blockchain or token standard and is worth the same as the original cryptocurrency. Purchased Bitcoins are spun onto Terra’s blockchain and thus can be sent to UST’s smart contract to back its assets.
In the last few hours, the CEO of Terra, Do Kwon, confirmed that they already acquired more than US$2 billion in Bitcoin, suggesting that there is still quite a way to go. Thus, it is to be expected that the rise of Bitcoin will continue.
Terra’s initiative is something unheard of in the crypto market, but many specialists expect it to be a trend that will gain new followers in the near future.
Rumors about Terra buying the market’s most traded token as a reserve asset began circulating last week. Speculation around the size of these purchases pushed the price of the largest cryptocurrency higher, proving to be one of the main bullish catalysts. Therefore, many analysts point out that it is Terra that is responsible for the rises that led Bitcoin to mark a 2022 high at US$48,000 this March 28.
The recent price rally pushed Terra’s net token capitalization to over US$37.17 billion, which is now 1.8% of the entire cryptocurrency market, up from 0.4% earlier this year.
