LUNA price jumps 17% after Terra raised $1B for Bitcoin-denominated stablecoin reserve

Key Takeaways:

• LUNA price surged 17% in the previous three days.
• The uptrend came in the wake of Terra raising $1 billion for a forex reserve.

YEREVAN (CoinChapter.com) – Terra (LUNA) price surged 17% in three days, hitting $57.30 during the European session on Feb. 23, a day after attracting $1 billion worth of investments to its coffers via a token sale round.

$1B worth of LUNA sales? DONE!

LFG, the non-profit created to support UST (Terra’s USD stablecoin), raised funds to sponsor a Bitcoin-denominated Forex Reserve for the stablecoin in “one of the cryptocurrency industry’s largest sales to date.”

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 (UST) 🌍 Powered by LUNA 🌕 (@terra_money) February 22, 2022

Jump Crypto and Three Arrows Capital led the raise, with Republic Capital, GSR, Tribe Capital, DeFiance Capital, and other “unnamed investors” closing the march.

Also read: Terra(LUNA) down 15% after Wonderland controversy reveal.

Terra clarified that LFG launched the initiative to provide a further layer of support for the UST peg. Furthermore, the non-profit intends to achieve the said support by using assets “less correlated” to the Terra ecosystem, like Bitcoin.

The new reserve will act as a “release valve” for UST redemptions during selloffs in crypto markets. In other words, it is designed to ensure that the price of the stablecoin remains pegged. In detail, UST is an algorithmic stablecoin that, unlike Tether, does not use collateral to maintain its price.

Instead, UST relies on market incentives, as the blockchain clarified.

Also read: Terra nears decisive breakout as LUNA price rises on a bloody crypto day.

When the demand for Terra is high and the supply is limited, the price of Terra increases. When the demand for Terra is low and the supply is too large, the price of Terra decreases. The protocol ensures the supply and demand of Terra are always balanced, leading to a stable price.

explained Terra.

LUNA price slope bounce

Moreover, the digital asset met a confluence of support on Feb. 21, which prompted the price bounce.

Also read: Ethereum killers Solana (SOL), Terra (LUNA), and Avalanche (AVAX), back on track after brutal January—what to expect?

In detail, LUNA retested a muti-month support trendline with a positive slope. Additionally, the digital asset bounced off a flipped former resistance bar at approximately $47-50.

Meanwhile, the three-week sideways consolidation suggested a sharp break shortly. Crypto analyst CryptoRand agreed with the outlook, forecasting a bullish “rocket” waiting for LUNA.

The rocket is waiting for $LUNA… 🌛 pic.twitter.com/2UP8SOWAhX

— Crypto Rand (@crypto_rand) February 21, 2022

Nonetheless, altcoins like LUNA continues to tread ahead amid risks of broader crypto market meltdown led by the ongoing Russia-Ukraine crisis and prospects of a 50 basis rate hike in the U.S. in March.