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    Home » Crypto News » Terra’s Bitcoin Buys and the Recent BTC Price Spike

    Terra’s Bitcoin Buys and the Recent BTC Price Spike

    Author: George Georgiev

    Last Updated Mar 28, 2022 @ 10:47

    Bitcoin’s price is trending higher for a few days now. Is Terra the reason for this?

    The entire cryptocurrency community is buzzing on Do Kwon’s latest tweets, and Terra’s recent bitcoin buys. Are they the reason for the most recent rally? Let’s dig in.

    Terra Buying Bitcoin

    Do Kwon, Co-Founder, and CEO at Terraform Labs, the company building the Terra protocol and ecosystem – put the cryptocurrency community on fire a few days ago with a single tweet.

    UST with $10B+ in BTC reserves will open a new monetary era of the Bitcoin Standard. P2P electronic cash that is easier to spend and more attractive to hold.

    The post sparked a massive discussion, and one of the first to chip in was none other than Adam Back – a well-known Bitcoin proponent and co-founder and CEO of Blockstream. He asked where the money is coming from, to which Do Kwon responded:

    It’s not 10B today – as UST money supply grows a portion of the seigniorage will go to build BTC reserves bridged to the Terra chain.

    We have 3B funds ready to seed this reserve, but technical infrastructure (bridges etc) is still not ready yet.

    Jump Crypto Proposes Bitcoin Reserve Pool

    Jump Crypto subsequently submitted a Terra community proposal regarding how the LFG pool can deploy its Bitcoin reserve to defend the UST peg.

    Said pool is intended to facilitate “rapid BTC liquidity” aimed at supporting UST when the peg deviates to the downside, and it would rely on traders to replenish the reserve when the turbulence passes.

    ADVERTISEMENT

    In essence, it would closely resemble how LUNA and UST’s on-chain mechanism works, but the LFG pool would hold wrapped BTC, which would also require it to use a different architecture. Also, the pool should use different exit and entry liquidity parameters.

    img1
    Source: Terra Official Proposal Page

    $125 Million BTC Buys at a Time

    And while some laughed at the notion, Do Kwon went ahead with his plan. Tracking their purchases was the popular crypto commentator Pentoshi, who noted that the current BTC holdings of Terra currently amount to 21,323.

    Terra has been buying in batches of $125 million, and Pentoshi argued that:

    2.5-3k BTC per day of supply removed over a long period of time = huge impact. Those who are short have to cover higher at some point as supply itself dissipates. What is scarce, becomes more so. This clip can bring back the apes, in which Do Kwon is the lord of the Apes.

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    Tags: Bitcoin (BTC) Price Terra (LUNA)
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    About The Author

    George Georgiev
    More posts by this author

    Georgi Georgiev is CryptoPotato's editor-in-chief and a seasoned writer with over two years of experience writing about blockchain and cryptocurrencies. Georgi's passion for Bitcoin and cryptocurrencies bloomed in late 2016 and he hasn't looked back since. Crypto’s technological and economic implications are what interest him most, and he has one eye turned to the market whenever he’s not sleeping. Contact George: LinkedIn

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