Terra buys $125 million of Bitcoin for its reserve

Terra, successful caller weeks, has emerged arsenic 1 of the best-performing integer assets, with its price-performance outpacing the bulk of its competitors.

The network, however, made a startling revelation precocious done its CEO, Do Kwon, who stated that they would beryllium purchasing $10 cardinal Bitcoin to Luna reserve.

According to Kwon’s announcement, Terra would beryllium utilizing the purchased Bitcoin arsenic a reserve for its fashionable algorithmic stablecoin, UST.

$UST with $10B+ successful $BTC reserves volition unfastened a caller monetary epoch of the Bitcoin standard.

P2P physics currency that is easier to walk and much charismatic to clasp #btc

— Do Kwon 🌕 (@stablekwon) March 14, 2022

Less than 2 weeks aft the announcement, it has present been revealed that the web has made its archetypal purchase. Popular crypto influencer Lark Davis revealed connected Twitter that Luna purchased $125 cardinal worthy of Bitcoin.

$luna makes its archetypal acquisition of #bitcoin worthy 125 cardinal dollars!

— Lark Davis (@TheCryptoLark) March 22, 2022

While this acquisition represents a fraction of the full magnitude the laminitis said they would buy, the network’s acquisition shows the content they clasp successful the coin arsenic integer golden compared to fiat currency and its carnal counterpart, gold.

Apart from this, Luna Foundation Guard’s (LFG), past month, stated that it was capable to rise $1 cardinal to physique its Bitcoin reserve. This, according to Matthew Dibb of Stack Funds, was a astute determination that would effect successful less fluctuations of UST.

Why Terra is pivoting to Bitcoin

Terra’s Bitcoin acquisition has raised galore questions among the crypto community, with galore asking if purchasing the flagship integer plus was the close prime alternatively of backing an plus wrong its ecosystem.

In response, 1 Twitter idiosyncratic posted that it is “a stake to unafraid their ecosystem by holding little correlated assets that person underlying worth if their ecosystem were to fail. Most currencies utilized to beryllium backed by golden to insure its worth (gold standard), and Luna is recreating (something) akin with Bitcoin (Bitcoin Standard).”

It’s fundamentally a stake to unafraid their ecosystem by holding little correlated plus that has underlying worth if their ecosystem were to fail. Most currency utilized to beryllium backed by golden to insure its worth (gold standard) and Luna is recreating akin with Bitcoin (Bitcoin Standard)

— CryptoKidDonnieSmith (@CryptoKidDonni1) March 22, 2022

To explicate the above, astir governments astir the satellite antecedently had their monetary strategy tied to that of golden which has a constricted supply. This helped galore of these countries debar inflation, and astatine the aforesaid time, they were capable to get a unchangeable monetary environment. However, it soon went obsolete arsenic galore countries began to follow fiat money.

From the foregoing, 1 tin easy deduce that Terra is pioneering a Bitcoin standard. In this situation, the integer plus would beryllium utilized arsenic a planetary reserve currency to backmost each fiat currencies and successful this case, cryptocurrencies.

Anthony Pompliano, successful his newsletter, opined that “the determination to backmost UST with Bitcoin creates a symbiotic relationship, which allows UST to person assurance that the plus is backed by the astir superior collateral.”