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Cryptoverse: Is Bitcoin about to become a reserve currency?

Cryptoverse: Is Bitcoin about to become a reserve currency

A crypto platform’s pledge to amass $10 billion (€9.2 billion) worth of Bitcoin to back its own “stablecoin” is firing up the market. It’s part of a wider movement to crown Bitcoin as the reserve currency of a new age.

EURONEWS, REUTERS — Seoul-based Terraform Labs has so far built up nearly 40,000 Bitcoin worth $1.7 billion (€1.5 billion) in a series of purchases via a non-profit affiliate, Luna Foundation Guard, according to publicly available blockchain data.

The spree follows Terraform co-founder Do Kwon’s announcement on Twitter last month that the project would buy the $10 billion worth of Bitcoin reserves to underpin TerraUSD, breaking ranks with other large stablecoins – a ballooning class of cryptocurrencies that aim to minimise wild price swings and are typically backed by US dollar reserves.

Stablecoins are a common medium of exchange and are often used by traders seeking to move funds around and speculate on other cryptocurrencies. A stablecoin backed by Bitcoin reserves, according to Kwon, “will open a new monetary era of the Bitcoin standard”, referencing the gold standard that formed the backbone of global finance about a century ago.

The acquisitions, and the anticipation of more to come, are supporting the price of Bitcoin, with some market players identifying them as a big driver of Bitcoin’s climb back towards $48,000 (€44,000) at the end of March. More significant, perhaps, is whether others will follow Terraform’s lead.

Buying $10 billion worth can move the price in the short term. But over the longer period, it’s more what it signals – that Bitcoin has been introduced as the hottest form of collateral backing for currencies.
Sid Powell, CEO of Sydney-based crypto lender Maple Finance

Full article by Lisa Pauline Mattackal and Medha Singh (REUTERS) is available on euronews.com.

Published: 13. April 2022
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