Bitcoin May Become Reserve Currency

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Bitcoin May Become Reserve Currency

Bitcoin Crowned as Reserve Currency

A wider movement is being witnessed to crown bitcoin. A Seoul-based cryptocurrency platform lately pledged to reserve it worth $10 billion to back a stablecoin. This is firing the market.

Terraform Labs has built about 40,000 bitcoin in several purchases that are worth about $1.7 billion through Luna Foundation Guard, a non-profit affiliate. The spree is a follow-up of a tweet of Terraform Labs co-founder about purchasing bitcoin worth $10 billion as a reserve to underpin stablecoin TerraUSD, which is said to be minimizing the wild price swings

TerraUSD is backed by the United States dollar reserves and simultaneously if backed by bitcoin reserves may open up a new monetary era similar to what the world has seen gold standard that backed global finance in the past century.

Analysts believe the buying of bitcoin worth $10 billion may lead to its price rice in the short term and in the long run the currency seems to be counted as collateral backing for other currencies.

However, some analysts argue that a closer embrace between two types of cryptocurrencies may give birth to a new risk in the segment.

Stablecoins have gained ground in recent years and have become mediums of exchange. These are being used by traders to move funds or to speculate on other crypto coins. Swapping tether for bitcoin is easier than the same with USD. The market cap for tether in 2021 was $44.5 billion while that of TerraUS in the same year was $1.76 billion. Today, the market cap of thetether is $82.3 billion while that of TerraUSD is $16.7. A rise of 85 percent and 850 percent respectively has been witnessed in just a year of time.

TerraUSD is currently ranked in fourth place in the list of largest stablecoins in the world with respect to market cap. It is pegged to the USD in the ratio of 1:1.

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