Terra’s LUNA surges 17% as UST becomes third largest stablecoin

Terra’s LUNA outperformed the wider crypto market with a 17% bump in the past 24 hours, pushing prices to over $90 in Asian hours on Tuesday.

LUNA pushed past the $80-$82 mark, a pivot support level, to as much as $92.07 during early Asian hours. Profit-taking saw prices fall to $89 at writing time, another support level for the token. The move comes after a nearly 37% drop in the first two weeks of April following lifetime highs of $120 earlier this month.

LUNA jumped to resistance at over $90 this morning. (TradingView)

LUNA is a governance token for money market protocol Terra. The spike comes as Terra's algorithmic stablecoin UST toppled Binance USD (BUSD) to become the third-largest stablecoin by circulation, during the later hours of Monday.

Terra also became the largest buyer of Convex’s CVX token over the past 30 days with over $17 million in purchases, according to research firm Delphi Digital.

Convex is a protocol that allows users to earn fees without locking their CRV, the token of the decentralized lending project Curve. Fees earned on Terra’s deposits are distributed among Terra users.

Stablecoins are cryptocurrencies pegged to fiat currencies, usually the U.S. dollar, with each token backed by an equivalent amount of fiat in reserve. Algorithmic stablecoins like UST take this one step ahead and can be backed by a basket of assets, such as bitcoin (BTC), without depending on any centralized third party to hold those assets.

In February, major crypto funds led by Jump Crypto invested $1 billion in the Luna Foundation Guard (LFG), a Singapore-based nonprofit that aims to maintain UST’s peg by purchasing several assets as reserve backing.

LFG has since purchased bitcoin, Avalanche’s AVAX, other stablecoins, data shows, with Terra also donating 10 million LUNA, worth $890 million at current prices, last week. The reserves currently sit at $2.48 billion at the time of writing, with 69% held in bitcoin.