A crypto platform’s pledge to amass $10 billion worth of bitcoin to back its own "stablecoin" is firing up the market. It’s part of a wider movement to crown bitcoin as the reserve currency of a new age.
Seoul-based Terraform Labs has so far built up nearly 40,000 bitcoin worth $1.7 billion in a series of purchases via a non-profit affiliate, Luna Foundation Guard, according to publicly available blockchain data.
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The spree follows Terraform co-founder Do Kwon’s announcement on Twitter last month that the project would buy the $10 billion worth of bitcoin reserves to underpin TerraUSD, breaking ranks with other large stablecoins - a ballooning class of cryptocurrencies that aim to minimise wild price swings and are typically backed by U.S. dollar reserves.
A stablecoin backed by bitcoin reserves, according to Kwon, "will open a new monetary era of the Bitcoin standard", referencing the gold standard that formed the backbone of global finance about a century ago.
The acquisitions, and the anticipation of more to come, are supporting the price of bitcoin, with some market players identifying them as a big driver of bitcoin s climb back towards $48,000 at the end of March. More significant, perhaps, is whether others will follow Terraform s lead.
"Buying $10 billion worth can move the price in the short term," said Sid Powell, CEO of Sydney-based crypto lender Maple Finance. "But over the longer period, it s more what it signals - that bitcoin has been introduced as the hottest form of collateral backing for currencies."
