The Luna Foundation Guard remains steadfast about building up its Bitcoin war chest, but the price of BTC continues to fall.
The Luna Foundation and its outspoken CEO Do Kwon entered the Top 20 Bitcoin HODLers as Terra marched on towards its goal of becoming one of the biggest Bitcoin holders in the world.
According to BitInfoCharts, the Luna-LFG wallet sits in 19th position with 39,898 BTC, worth over $1.6 billion at the time of writing.
What Is Terra's Endgame?
Terra’s strategy is remarkably reminiscent of Michael Saylor's approach: buy a ton of Bitcoin and virtually tie your company's success to the success of BTC.
An oversimplification, granted, but not entirely wrong.
With Do Kwon, CEO of Terra, announcing that the Luna Foundation eventually plans to accumulate $10 billion worth of BTC, Terra would become one of the biggest holders in the world. Initially, the market received this strategy well, with LUNA hitting an all-time high just a few days ago. But despite Terra's voracious appetite for new BTC, the crypto market seems headed for lower prices in the short run.
So, what is the reasoning for the Luna Foundation buying a ton of BTC?
The key is Terra's main product: the UST stablecoin. An algorithmic stablecoin at heart, UST is backed by LUNA. If it de-pegs, LUNA is used to restore the peg. If UST overshoots its peg, LUNA is burned to return prices to an equilibrium. Put simply, more adoption of UST raises trust in LUNA, which leads to more adoption of US — a virtuous circle.
Of course, this dynamic can also reverse, which is where Bitcoin comes in.
By adding Bitcoin to the Luna Foundation's reserve, Do Kwon aims to increase trust in UST. If UST de-pegs, the Luna Foundation — and its war chest full of BTC — can act as the buyer of last resort. The entire strategy is explained in detail in this Twitter thread by danku_r.
Will this strategy work out for Do Kwon and LUNA?
Only time will tell, but for now, the South Korean CEO is happy to back himself with his own money. He recently accepted a $1 million bet that LUNA will be worth more in a year than it is right now.
Until then, expect the Luna Foundation to stay "accumulatooors."
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