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Terraform Labs CEO Do Kwon has conceded that a crash in the price of Bitcoin would be “negative” for the stability of the TerraUSD stablecoin but that he expects Bitcoin to go up.
Kwon made the comments in an interview on the Unchained podcast on Tuesday. Host Laura Shin asked Kwon what the short-term implications of holding so much BTC would be for the stability of UST.
Kwon said, “The worst case would be if we were buying Bitcoin and a crash happens six months later, and it’s correlated with a massive fall in demand for UST,” which would be, as he modestly put it, “negative.” However, that scenario isn‘t keeping him up at night:
“I’m sort of betting that the long-term scenario of Bitcoin going up, and the reserves being strong enough to withstand UST demand drops is the more likely scenario.” Kwon has been buying Bitcoin to hold in Terra’s treasury as 40% of the collateral for UST. So far, Terra has acquired 30,727.9 BTC and most recently purchased 2,943 BTC on Tuesday. This makes Terra the third-largest single-wallet BTC holder.
Kwon even hinted at the possibility of investing into the Metaverse later on, and it seems he’s got his eyes on the many dApps within in it like Suku world and others. Seems like this guy’s got his investments in check, and understands the state of the market. Kwon’s comment drew the attention of the crypto community. In a tweet, Ethereum developer Antiprosynthesis responded by asking if all entities that use BTC to back a stablecoin should be considered layer-2 solutions. He said, “Even I don’t believe that Bitcoin’s standards have plummeted to such extent.” A layer-2 solution helps a layer-1 blockchain to scale up its operations by moving many transactions to an alternate network to reduce congestion. BTC is trading at $44,463, down 5.61% over the past 24 hours, according to Cointelegraph’s Price Index.
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