Rapture #176: Do Kwon Saving the Market
What a wild play by Do Kwon. For those of you who live under a rock, Do Kwon, the Terraform Labs (company behind Terra) CEO, announced yesterday that the Luna Foundation Guard has raised $2.2 billion that Kwon intends to convert to BTC for a bitcoin reserve. Furthermore, Kwon has a desire to raise this amount to $3 billion. Kwon has raised this money through OTC sales of LUNA and wants to use this BTC to back UST, the fastest growing stablecoin.
In order to accumulate this BTC, on-chain forensics displays that Kwon looks like he is market buying around $125 million worth of BTC per day.
Lets dive into the data that displays this ape in action
On-chain coverage
The best coverage of these buys comes from one of my favorite crypto degens, Pentoshi.
Pentoshi posted a photo of two on-chain transactions of approximately $125 million. Since he posted the photo, another around $125 million transfer has been executed. These transfers are coming from a Gnosis Safe wallet controlled by Luna and are being sent to a wallet that seems to be controlled by Jump.
This wallet that is allegedly controlled by Jump is then subsequently sending this $125 million to Binance.
In essence, Kwon looks to not be covering his on-chain tracks at all and definitely makes it look like he is sending $125 million per day via Jump to Binance in order to fulfill his promise of buying $3 billion worth of BTC for the UST reserves.
Market effects
$125 million daily presumable market buys in this low volume environment (daily volume currently at approximately $26.7 billion worth of BTC) can undoubtedly move the market a hair. Furthermore, Kwon's broadcasting of his moves so clearly to the public likely incentivizes others to buy BTC in order to front-run these purchases, creating more buy volume for BTC.
All of the major traders on crypto Twitter are buzzing about this move, so clearly the market knows about it and is reacting to it.
Nearly 2.5 - 3k extra BTC of circulating supply is now being removed per day, and over a long period of time these buys can have a huge impact. Eventually, shorts might feel they have to cover higher in order to ensure they don't cover when supply is too scarce.
This sort of event-driven play can have the effect of pushing market momentum dramatically in the bullish direction, at least in the short term.
Takeaways
Kwon is doing his best to save the otherwise fearful crypto market in a deteriorating macro environment. Paired with the US equities market rebound in the past week, crypto recently has been extremely risk on. Not only has BTC risen to approximately $44,000, but trash like ETC is up 79% in the past 7 days.
Apeing can be contagious.
That being said, if there is not a significant rally within the next 2 weeks as Kwon maintains these gargantuan market buys, I would be significantly worried about the ability to generate any bullish momentum in crypto.
There are not many clearer bullish events than whales market buying BTC daily.
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