Terra (LUNA) has extended its Bitcoin buying spree, becoming the second-largest corporate holder of the top cryptocurrency. As per this acquisition, the Luna Foundation Guard (LFG) purchased $1.5 billion worth of BTC as per the official annoucement. It did so via an over-the-counter deal with full-service digital currency prime broker Genesis and crypto trading firm Three Arrows Capital.
How did the price react?
The aforementioned purchase brought Terra’s total reserves to more than $3 billion, the bulk of that in Bitcoin. It holds smaller shares of LUNA, AVAX, and USDT and USDC stablecoins.
The firm started buying Bitcoin in late February in order to ensure the stability of the TerraUSD (UST) token. Terra co-founder Do Kwon saw the transition to Bitcoin backing as the best interest of UST’s long-term price stability.
“For the first time, you’re starting to see a pegged currency that is attempting to observe the bitcoin standard,” said Kwon, according to CNBC. “It’s making a strong directional bet that keeping a lot of those foreign reserves in the form of a digital native currency is going to be a winning recipe.”
Do Kwon expects that the non-profit’s Bitcoin holdings will eventually reach $10 billion. At press time, LFG held 80,393 Bitcoins whose total value stands close to $2.9 billion.
Despite this bullish scenario, the price didn’t quite showcase or rather reciprocate the same enthusiasm. Terra’s LUNA is under-performing, plunging more than 7% over the last 24 hours. Despite the recent success, deposits from Terra’s DApp witnessed a 3% setback, as it fell to $28.75b mark.
Give me some sunshine…
Well, despite the headwinds, LUNA did showcase some promising pictures. Firstly, LUNA’s volumes metric saw a major spike following a bearish period. Improvements in the Terra ecosystem which drew the attention of millions of investors likely played the biggest role in the spike in LUNA trading volume.
Apart from this, developers too showcased a bullish scenario, thereby portraying some potential. Development activity is a reasonably good measure of how much potential, developers see in the project. The graph below paints a bullish picture looking at the surge.
In addition, the total number of unique addresses that hold assets in the said network witnessed an increase as per CoinMarketCap. On 5 May, 1,575 new holders joined this bandwagon, a significant rise from April.
Moreover, weighted sentiment remained in negative territory as seen on Santiment. Ergo, an extended negative weighted sentiment could sometimes trigger a rally.