The Luna Foundation Guard recently added another stack of Bitcoin to its holdings, fueling speculation about Terra’s LUNA token.
Terra reaches a new high.
Terra has regained her flight.
With a surge to $106.43, the LUNA token on the Layer 1 blockchain has re-entered price discovery phase, spurred by speculation regarding Terra’s Bitcoin reserve.
The Luna Foundation Guard (LFG) announced plans to boost its Bitcoin reserves to $3 billion, with a long-term goal of constructing a $10 billion fund, putting Terra in the crypto spotlight over the past week. The LFG has been purchasing Bitcoin in huge quantities of $125 million on a daily basis, assisting in the rise of the top crypto currency.
LFG purchased another 2,830 Bitcoin worth roughly $135 million on Monday, raising its total reserves to 27,785 Bitcoin, according to on-chain statistics. Jump Trading explained that LFG’s Bitcoin acquisition was part of a plan to “offer deep liquidity at a discount when the UST peg is under pressure” in a community proposal about the fund.
The most recent acquisition is timed to coincide with a significant increase in the cryptocurrency market. Bitcoin has gained 15.8% in the last week, while many smaller-cap assets have seen big gains. After hitting a low of $1.6 trillion on February 24, the global cryptocurrency market cap has risen above $2.2 trillion.
Terraform Labs founder and CEO Do Kwon has been clear about his intention to expand UST’s reserves as LFG has continued to amass Bitcoin. He’s gone as far as tweeting jokes about Bitcoin’s soaring price in between outlining how the accumulation strategy will make UST the world’s first form of Internet money to accept the leading crypto as a reserve asset. He tweeted early Tuesday, alongside the popular Bernie Sanders “I am once again asking” meme, “I am once again asking you to short #btc,” meaning that the asset’s price will likely continue to rise.
Speculators are beginning to feel that Terra might be the new catalyst that propels Bitcoin and the rest of the crypto industry into a new bull market. Such market behavior could eventually spread to LUNA.
However, there is a flaw in this argument. Jump Crypto and Three Arrows Capital organized a LUNA token sale that raised $1 billion in Bitcoin for LFG. As a result, a large amount of LUNA tokens are entering circulation, which may limit the token’s capacity to rise in value in the future. LUNA, on the other hand, appears to be benefiting from the current market hype. Early Tuesday, it reached a fresh all-time high.
The recent rise looks to be the result of LUNA breaking out of a symmetrical triangle that it had been trapped in since late February. According to this consolidation trend, LUNA might rise another 14 percent to a target price of $122.
A correction may be necessary before LUNA can move forward. On its lower timeframes, LUNA is currently flashing a sell signal, which might lead to a surge in profit-taking, sending it back to $99 before the uptrend begins.