The current aggressive accumulation of Bitcoin by Terra has no doubt been a positive catalyst for the cryptocurrency’s price. So far, through The Luna Foundation Guard (LFG), over $1.7 billion of Bitcoin has been purchased to backstop Terra’s algorithmic UST stablecoin.
LFG added another 2,500 BTC, worth approximately $100.4 million at the time of the transaction, to its reserves on April 13 and 123 BTC yesterday. Thus, Terra now owns 42,530 BTC, which is approximately $1.72 billion at the time of this writing — just 700 BTC less than Tesla’s corporate treasury holdings.
Despite the massive purchases, there are lingering questions as to whether Terra can sustain a move higher by Bitcoin. According to a report by “IntoTheBlock” a crypto data research company, despite LFG being one of the most avid Bitcoin buyers, scooping over 40,000 BTC in the last 30 days, those investments still make up a very small portion of Bitcoin’s daily volume.
As per the report, the $67M daily average inflow into Terra’s reserves represents just 0.27% of Bitcoins’ daily volume as per data by CoinGecko. Further, Terra’s highest purchase of $223M worth of Bitcoin on April 6 made up only 0.88% of that day’s trading volume signaling that Terra’s market conviction still has a long way to go.
“This suggests that impact in Bitcoin’s price throughout late March is likely more due to the psychological factor of having a large whale such as Terra avidly accumulating deterring sellers, rather than the actual buying propelling the rise.” Read the report.
Furthermore, a dive deeper into whale address activity also seems to paint a picture contrary to Terra’s. In the past three months, the total Bitcoin balance held by addresses with 1k to 10k BTC dropped to its lowest. It is worthy to note that this click of whales is considered the real market movers, given that they hold over a quarter of Bitcoin’s total supply.
On-chain data shows that this group has gone mute, with groups holding over 100 BTC mostly decreasing their positions.
This liquidity, however, seems to be flowing into smaller addresses, particularly the group holding between 0.001 BTC and 0.01 BTC which has had the fastest growth in the past 30 days.
Although Bitcoin’s bearish plumb has been attributed to a list of other issues including the Federal Reserves’ slipups as well as other microeconomic concerns which are believed to impede investor decisions, it seems that large investors are still pondering on what could go worst with Terra’s BTC purchases.
That said, Bitcoin continues to recede, losing close to 13% since April 1, and is trading at $40,390 as of reporting with investors such as Peter Brandt, a lionized trader speculating that Bitcoin’s next rocket stage may not be ignited until 2024.