- Terra announced it raised $1 billion from Jump Crypto and Three Arrows Capital. The funds are intended for a Bitcoin-denominated reserve for the network’s largest stablecoin, TerraUSD (UST).
- LUNA’s price jumped more than 14%, rising above $60 following the announcement.
- Bitcoin traded near $39,000 after a 4% gain as bulls aimed to hold key support around $38,000.
LUNA, the native token of the Terra proof-of-stake (PoS) blockchain, climbed more than 14% over the past 24 hours amid a broader upswing across crypto markets.
Terra’s sharp recovery briefly pushed the token above $60 against the U.S. dollar on Wednesday morning.
According to CoinGecko, the LUNA/USD pair is approaching a supply barrier, and momentum could carry the token toward highs last seen in January.
$1 Billion for a BTC Reserve
On Tuesday, the Luna Foundation Guard (LFG) announced it had successfully closed a $1 billion private token sale, one of the largest financings in the crypto sector. LFG said the proceeds will be used to establish a Bitcoin-denominated reserve for its stablecoin, TerraUSD (UST).
1/ The long awaited [REDACTED] 💎3 is here!
📣 The Luna Foundation Guard (LFG) has closed a $1 billion private token sale to establish a decentralized $UST Forex Reserve denominated in $BTC! 📣
🧵👇
— Terra 🌍 Powered by LUNA 🌕 (@terra_money) February 22, 2022
UST is a stablecoin with roughly $12 billion in market capitalization, backed by reserve assets intended to maintain its 1:1 peg to the U.S. dollar.
Luna Foundation Guard says the reserve adds an extra layer of protection to help ensure the peg does not deviate substantially during “shrinking cycles.”
The UST Forex Reserve is an LFG initiative designed to add support to the UST peg by holding assets that are less correlated to the Terra ecosystem, such as Bitcoin, LFG wrote.
The decentralized Forex reserve for the stablecoin attracted investment support from Jump Crypto and Three Arrows Capital, alongside other leading venture investors.
Following the announcement, LUNA’s price rose over the past 24 hours. The LUNA/USD pair was trading near $59.97 at the time of reporting.
Elsewhere, Bitcoin climbed about 4% to trade above $39,000. The BTC/USD pair had dipped below $37,000 on Tuesday as markets reacted to uncertainty from the Russia-Ukraine conflict.