Bitcoin Flirts With $30K During Asia Trading Day as Luna Foundation Guard Fights to Defend UST Peg

Glassnode analyst says change in exchange balance is due to LFG using bitcoin reserves to defend stablecoin peg.

AccessTimeIconMay 11, 2022 at 8:26 a.m. UTC
Updated May 11, 2023 at 6:57 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

Bitcoin (BTC) was down over 3.5% throughout the trading day in Asia, briefly touching the $30,230 mark, according to the CoinDesk price index, as the Luna Foundation Guard (LFG) moves the entirety of its reserves to bitcoin exchanges to defend its UST stablecoin’s 1:1 dollar peg.

(Glassnode)
(Glassnode)
  • LFG’s reserve balance has declined from 80,394 bitcoin to zero, and the majority has been deposited onto the Gemini exchange, according to Glassnode data.
(Glassnode)
(Glassnode)
  • James “Checkmate” Check, an analyst with Glassnode, said he believes Gemini is the custodian for market maker operations, or for the sale of this bitcoin. Check said it's not clear how much of the reserve was sold or loaned to market makers.
  • The amount of bitcoin on exchanges is at a high not seen since November 2017, but Check said market conditions are very different and it's tough to make a comparison.
  • “It is not the same as 2017 in any way really, a completely different mechanism and set of entities at play. What we are observing is closer to a miniature version of George Soros attacking the peg of the British Pound, where the LFG is playing the role of the Bank of England (with a similar result it seems),” he said in an email to CoinDesk.
  • Meanwhile, Terra's LUNA token has dropped nearly 85% in the past 24 hours and is currently trading at approximately $4.50, according to CoinGecko data.
  • UST is currently at 0.35, down 60% on the day, calling into question the success of LFG’s operation.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk employees, including journalists, may receive options in the Bullish group as part of their compensation.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.