$250M more Tether added – is this good for crypto?
Tether (USDT) is a highly controversial Cryptocurrency which was originally formulated from the Bitcoin blockchain utilising the Omni Layer Protocol. It currently has a market-cap of approximately $2.7B putting it at #11 on the CoinMarketCap. Tether is renowned for being a popular ‘stable-coin’ as its value is pegged to the dollar. This works because Tether Limited have $1 stored in the bank for every 1 USDT minted to ensure the asset is correctly backed.
Throughout 2017, there was major speculation that Tether was a scam and that it was not backed by the dollar. This created a lot of FUD and many people steered away from using USDT. We also seen the launch of various other ‘stable-coins’ including True USD (TUSD) to provide some competition for Tether. Despite the criticism, it has now been verified that the USD reserves held by Tether are accurate and Tether have released a transparency update as an FSS report which is available here.
History of Minting
As Cryptocurrency has grown in interest and major exchanges have seen their number of registered accounts grow exponentially, the use of ‘stable-coins’ like Tether (USDT) has increased. Tether has seen multiple minting events in 2018 alone which have somewhat contributed to the Bitcoin price. Therefore, mass amounts of hype are experienced when more Tether is printed. Below is a list of this years minting history for Tether (USDT) which can be viewed from the Omni Explorer.
Effect on Bitcoin Price
Throughout 2018, there has now been three occurrences where Tether has printed more than 200M USDT in a single minting event as outlined above. These printing events have historically affected the price of Bitcoin, sometimes in a positive move to the upside and sometimes in a negative move to the downside. An upside move suggests that buyers are converting fiat to Tether then buying crypto. A downside move suggests that investors are shorting the market and converting to USDT.
An interesting thing to point out with the most recent printing event occurring on the 25th of June 2018 is that the Bitcoin price is experiencing its lowest valuation in 2018 thus far. This means there is a possibility that the printing of USDT could have a positive effect on the price action and suggest that market players are looking to start buying in bulk and pushing the price. However, the opposite may also occur…
At this stage, we cannot confirm what effect the printing of an additional 250M Tether (USDT) will have on the Bitcoin price and the rest of the market. What we can identify is that when these events occur, there is a reason for it. The price of Bitcoin is likely to move whether it be positive or negative. Keep in mind that buyers/sellers may space out their actions to make it appear less manipulative. Remember to trade responsible and stick to your game plan. This is not financial advice.
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