Terra’s USD 10B Bitcoin Bet May be Both a Curse and a Blessing

cryptonews.com:

Terra (LUNA) founder Do Kwon’s plan to partly back the stablecoin UST with bitcoin (BTC) is causing both excitement and concern in the community, with some fearing what could happen to the bitcoin market if Terra faces problems with trust or liquidity.

The plan to back UST with BTC has been spearheaded by Terra’s Do Kwon, who on Twitter claimed that the stablecoin protocol could eventually have a bitcoin stack worth as much as USD 10bn or more.

The intention to buy USD 10bn worth of BTC was reiterated in a recent video interview, where Do Kwon said that the amount would make Terra “the largest single holder of bitcoin in the world,” besides Bitcoin's creator Satoshi Nakamoto.

“In that case, within the crypto industry, the failure of UST is equivalent to the failure of crypto itself,” Do Kwon said in the interview.

Among those who expressed some skepticism about the massive bitcoin holding Terra is amassing was Alan Eschweiler, chief revenue officer at crypto trading bot provider Stacked, who warned of what could happen if UST lost its peg.

“I remind you that UST is awesome when it's buying USD 3b worth of BTC and saving the market,” Eschweiler said in a Tweet, before adding:

“I also remind you it will be the bane of your existence when UST loses peg and we have the biggest forced seller of BTC in history.”

“Until then, we enjoy the pump,” Eschweiler said.

Other widely followed members of the crypto community also appeared to share the same concern, with one popular user saying that USD 10bn in BTC could get “nuked on us:”

Similarly, Eric Wall, chief investment officer at crypto hedge fund Arcane Assets, warned that the backing of UST with bitcoin does not necessarily mean that UST is immune from “a bank run.”

“If for any reason