Luna Foundation Guard Announces Purchase of $1.5bn in Bitcoin

Key Insights:

• Overnight, Terra’s (LUNA) Luna Foundation Guard (LFG) announced a series of Bitcoin (BTC) purchases totaling $1.5bn.
• The BTC purchases, reportedly over the last few days, came during a choppy time for BTC and the broader crypto market.
• Technical indicators are bearish for LUNA, with LUNA sitting below the 50-day.

The Luna Foundation Guard (LFG) has been in bitcoin (BTC) purchase mode since it announced plans to hold $10 billion in BTC reserves for TerraUSD (UST). In February, the LFG created a BTC denominated reserve for UST.

UST is pegged to the USD. The pegging mechanism involves the issuance and burning of LUNA tokens. At times when the price of UST sits above $1, users can mint UST by burning LUNA. Burning LUNA then reduces the supply of LUNA, which increases the value of LUNA.

To reach its $10 billion BTC reserve target, the LFG has actively been purchasing BTC. This week, the LFG announced another sizeable purchase.

The Luna Guard Foundation Buys Bitcoin Reserves Totaling $1.5bn in BTC

Overnight, the Luna Foundation Guard (LFG) announced the purchase of another $1.5bn in BTC.

The LFG retweeted several tweets from the media on the latest series of BTC purchases.

According to CNBC,

“The Luna Guard Foundation has acquired $1.5 billion in bitcoin to bolster the reserves of its most popular stablecoin, known as U.S. Terra.”

CNBC went on to say,

“The reserve now holds about $3.5 billion in bitcoin, which puts the UST Forex Reserve in the top 10 bitcoin holders in the world. It also holds north of $100 million in Avalanche, another cryptocurrency.”

According to the report, the LFG purchased $500 million from Three Arrows Capital, a crypto hedge fund. The other $1 billion came from an OTC swap.

4/ gmhttps://t.co/bFR9lTDR6G

— LFG | Luna Foundation Guard (@LFG_org) May 5, 2022

 

Do Kwon, co-founder, and CEO of Terra Labs, also announced the $1.5 billion BTC purchase on Twitter, saying,

“LFG acquired 1.5B worth of bitcoin over the last few days.”

LFG acquired 1.5B worth of bitcoin over the last few days

A lot more to go

Now time to water the plants 🌱 https://t.co/roSJfVVa3k

— Do Kwon 🌕 (@stablekwon) May 5, 2022

 

Do Kwon went on to tweet,

“Worry not about #Bitcoin – it is a fungible freedom to counter fungible state violence in fiat.”

Adding,

“And its rise will be inevitable as long as humanity yearns to be free.”

Worry not about #Bitcoin – it is fungible freedom to counter fungible state violence in fiat.

And its rise will be inevitable as long as humanity yearns to be free 🧡

— Do Kwon 🌕 (@stablekwon) May 5, 2022

News of the purchase had a muted impact on LUNA, which succumbed to broader crypto market forces.

LUNA Price Action

At the time of writing, LUNA was down 0.10% to $82.28.

LUNA remains under pressure following Thursday’s 4.43% decline that reversed a 4.46% gain from Wednesday.

On Thursday, market jitters over inflation and Fed monetary policy left LUNA and the broader crypto market in negative territory.

Technical Indicators

LUNA will need to move through the day’s $82.92 pivot to target the First Major Resistance Level at $87.27. LUNA would need the broader crypto market to support a breakout from $85.

An extended rally would test resistance at $90 and the Second Major Resistance Level at $92.15. The Third Major Resistance Level sits at $101.38.

Failure to move through the pivot would bring the First Major Support Level at $78.03 into play. Barring an extended sell-off, LUNA should steer clear of sub-$75. The Second Major Support Level sits at $73.69.

Looking at the EMAs and the 4-hourly candlestick chart (above), it is a bearish signal. LUNA sits below the 50-day EMA, currently at $84.89. This morning, the 50-day EMA pulled back from the 100-day EMA. The 100-day EMA also fell back from the 200-day EMA; LUNA price negative.

A move through the 50-day EMA would shift near-term sentiment.