Terra LUNA broke a new ATH record by going up to $107 today. The foundation behind the Terra ecosystem confirmed today that they have purchased nearly $1 billion worth of Bitcoin since January.
LUNA, the management token of the Terra network, increased by more than 10% today, reaching the level of $ 107. At the time of this news, the LUNA price was $106.84. LUNA is the 8th largest cryptocurrency with a market capitalization of $36.8 billion.
UST, the largest decentralized stablecoin of the Terra network, surpassed MakerDAO's DAI to reach a market cap of $16 billion. The likely reason for the price increase LUNA has experienced in recent days is that the Singapore-based LUNA foundation recently purchased $135 million worth of Bitcoin to support the UST stablecoin.
Losing its place in the ranking to Solana yesterday, the LUNA token is again just behind Cardano (ADA) as the 8th largest crypto asset with its latest upward move.
Terra's Bitcoin Reserves
According to Bloomberg's report, Do Kwon, the founder of the LUNA foundation and Terra, confirmed that they have purchased $1 billion worth of Bitcoin at four different times since January. At the time of this news, the foundation had 27,784 BTC in its wallet.
Unlike central stablecoins like Tether, which are backed by dollars, UST is backed by Bitcoin reserves. UST is also dependent on LUNA. So whenever UST is minted, the same amount of LUNA must be burned.
According to Do Kwon, Bitcoin reserves will maintain a healthier 1:1 balance of UST with the dollar. Do Kwon stated that the reason they chose Bitcoin was because they thought it was the strongest digital asset.
Due to the UST monetary policy, it is the first stable coin to use Bitcoin reserves. LUNA had similarly gained 78% in February.