Tera labs $135m Bitcoin buy was just 0.6% of daily volume

What

Do Kwon, Terraform Lab’s CEO, has said he wants Terra to be the world’s biggest Bitcoin holder after Satoshi and aims to hold over $10 billion of Bitcoin on Terra’s books after a $135 million purchase this week.

Why

Kwon says that having Bitcoin as an underlying asset will help to shore up support for Terra’s stablecoin as collateral as it aims to disrupt the stablecoin market with its US dollar-pegged USDT.

What’s next

As the “apex” asset, Kwon is hopeful that adding to Bitcoin to Terra’s balance sheet will help USDT not be totally reliant on its own Luna token for support.

The story

Speaking on the Unchained Podcast, Kwon outlined plans for Terra Labs to become more decentralised: “Terra’s goal is to be the largest decentralised money in crypto, period. Its goal is not to be the largest stablecoin in the Terra blockchain, so we’re sort of expanding into, let’s say, the Solana ecosystem, Avalanche, Ethereum, Polygon. We plan to be everywhere where there are developers and users.”

Terra joins the growing trend of using Bitcoin as collateral, with a number of companies offering loans backed by Bitcoin, as well as real estate firms now exploring crypto-backed mortgages.

Luna’s price hit a new all time high of $106 on Tuesday after Terra bought around 3,000 Bitcoin ($135 million) following Kwon’s announcement. This did not lead to a significant boost to Bitcoin’s price, however, the effect appears to have been minimal on any immediate price action. There is an estimated $20 billion of Bitcoin traded everyday — so Terra’s $135 million will have been filled easily without much of an impact as it accounts for just 0.6% of Bitcoin traded in a 24 hour period.

According to a report by Coindesk, this is Terra’s Bitcoin address, which currently holds 30,727 Bitcoin — worth around $1.4 billion. With an aim to increase these holdings almost 10 fold, it will be interesting to see how quickly the company accumulates this target and how this will affect Bitcoin’s price and supply. For those interested, there is now a Twitter bot that updates followers on Terra’s Bitcoin holdings. 

Kwon was quick to downplay Terra’s purchases and their impact on the wider market, making the point that if Bitcoin price were so easy to move it would be unsuitable to use as a reserve asset in the first place.