Glassnode analyst says change in exchange balance is due to LFG using bitcoin reserves to defend stablecoin peg.
Bitcoin 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 UST’s peg.
- LFG’s reserve balance has declined from 80,394 bitcoin to zero, and the majority has been deposited onto Gemini, according to Glassnode data.
- James “Checkmate” Check, an analyst with Glassnode, says he believes that Gemini is the custodian for market maker operations, or for the sale of this bitcoin. Check says 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 argues that 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, LUNA 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-day, calling into question the success of LFG’s operation.