Terra USD ten B Bitcoin Bet May be Both a Curse and a Blessing
Categories: Crypto News
Terra (LUNA) founder Do Kwon’s plan to partly back the stablecoin UST with bitcoin (BTC) is causing both excitement and concern in the community, with some fearing what could happen to the bitcoin market if Terra faces problems with trust or liquidity. The plan to back UST with BTC has been spearheaded by Terra USD Do Kwon, who on Twitter claimed that the stablecoin protocol could eventually have a bitcoin stack worth as much as Terra USD 10bn or more. “In that case, within the crypto industry, the failure of UST is equivalent to the failure of crypto itself,” Do Kwon said in the interview.
‘Biggest forced seller of BTC in history’
Among those who expressed some skepticism about the massive bitcoin holding Terra USD is amassing was Alan Eschweiler, chief revenue officer at crypto trading bot provider Stacked, who warned of what could happen if USD lost its peg. Other widely followed members of the crypto community also appeared to share the same concern, with one popular user saying that USD 10bn in BTC could get “nuked on us:” Similarly, Eric Wall, chief investment officer at crypto hedge fund Arcane Assets, warned that the backing of UST with bitcoin does not necessarily mean that UST is immune from “a bank run.”
If this were to happen, individual holders of UST would start to liquidate their stablecoins for BTC. And to the extent that they choose to sell BTC for fiat, a sell-off in bitcoin would happen, said Wall.
Terra ‘validates’ BTC as a reserve asset
More optimistic about Terra USD move was Julian Liniger, co-founder and CEO of the Swiss bitcoin broker Relai, who said it is “overall a promising development” that institutions from both crypto and traditional finance are starting to buy and hold BTC.As of Friday morning (UTC), the wallet that is confirmed to belong to Terra’s Luna Foundation Guard has amassed BTC 30,728, worth some USD 1.4bn at current prices. The foundation is, in other words, making progress towards the USD 10bn goal, although there is certainly still a long way to go.
Terra USD B Bitcoin bet can without a doubt be viewed as both a revile and a gift, contingent upon different elements and viewpoints. Here are a few contemplations:
Curse:
Volatility: Bitcoin is known at its cost unpredictability. On the off chance that Terra USD B Bitcoin bet is huge and the cost of Bitcoin encounters a sharp decay, it could bring about significant misfortunes for Land and its partners.
Regulatory Uncertainty: Bitcoin's administrative scene is as yet developing in numerous wards. On the off chance that new guidelines or limitations are forced on Bitcoin, it could adversely influence Terra USD venture and its capacity to use Bitcoin as a steady resource.
Reputational Risk: Putting resources into Bitcoin should be visible as a questionable move because of its relationship with illegal exercises and ecological worries. Land might confront reputational chances assuming that it's apparent adversely by partners or people in general.
Blessing:
Potential Upside: Bitcoin has additionally shown critical development likely throughout the long term. Assuming the cost of Bitcoin keeps on rising, Terra USD interest in USD B Bitcoin could bring about significant benefits, supporting its monetary position and capacity to enhance.
Diversification: Putting resources into Bitcoin can offer Terra broadening benefits. By holding Bitcoin, Terra might support against conventional market chances, as Bitcoin's worth is affected by unexpected variables in comparison to customary government issued types of money or resources.
Innovation and Adoption: Terra USD B Bitcoin bet should be visible as a stage toward embracing cryptographic money and blockchain innovation. It might situate Land as an early adopter and trailblazer in the space, possibly opening up new open doors for organizations and coordinated efforts.
Eventually, whether Terra USD B Bitcoin bet ends up being a revile or a gift will rely upon the presentation of Bitcoin, the administrative climate, and Land's capacity to really deal with the related dangers. It's essential for Land to painstakingly screen the market elements and change its system in like manner to moderate expected disadvantages and expand possible advantages.