Tether Issues 250 Million New Tokens, Bitcoin Awaits Price Bump
In its first release since May, Tether issued 250 million new USDT coins yesterday. With Bitcoin hitting 2018 lows in the past few days, the move has fueled speculation by those who think Tether is manipulating the crypto market that the release is an effort to support the bitcoin price. But the issuance could also signal investors lining up to pounce on a buying opportunity.
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250 Million USDT Released
USDT, the 11th largest cryptocurrency by market cap per Coinmarketcap, is a so-called “stablecoin”, a token which maintains a value equal to a fiat currency or basket of currencies. In Tether’s case, one USDT has the same value as one U.S. dollar.
Each USDT is also supposedly backed by one U.S. dollar, implying that $250 million USD worth of new funds now sit in the Tether reserve bank accounts. Tether transactions can be viewed on the Omni Layer, a platform built on top of the bitcoin blockchain that allows for the creation and trading of digital assets. Tether is not the only coin to use Omni, as other cryptocurrencies are also on the platform, but it does dominate, presently making up around 85 percent of the network’s transactions.
Speculation Continues About Tether and Market Manipulation
There has been ongoing speculation over whether Tether has the fiat reserves it claims to and if USDT is being used to manipulate the price of bitcoin (BTC) and the crypto markets more generally. There have been multiple independent reports that claim to have evidence proving the market manipulation theory, with the most recent coming earlier this month from two researchers at the Austin campus of the University of Texas.
They noted that new Tether were often issued “following market downturns and result in sizable increases in bitcoin prices,” and argued that Tether issuance was responsible for half of the rise of BTC in 2017. Prior to that, another report filed by an anonymous author had similar findings.
The timing of the new Tether issuance will do little to dampen this speculation, as it has occurred shortly after BTC hit a new 2018 low of $5,850 on June 24th. At the time of publication, the price of BTC is up a little more than seven percent from that low to slightly below $6,300.
An alternative explanation to the market manipulation theory is that large traders enter the market — via USDT — when buying opportunities present themselves.
The recent release brings the dollar value of USDT issued since the start of 2018 to $1.65 billion, with the last transaction occurring on May 18th, when 250 million new coins were created.
Tether Issues Transparency Report, Sees Executive Leave
Tether has been in the news recently, with a report last week that Phil Potter, the chief strategy officer of Bitfinex, was leaving the company. Leaks from the “Paradise Papers” have proven that Potter was also a director of Tether, despite repeated claims to the contrary. Apparent links between the two companies continue to alarm many in the cryptocurrency community.
A few days prior to the Potter news, Tether released a report by an American law firm which attempted to show that the company has enough cash reserves to cover its stablecoins. However, the report came with major caveats. The authors pointed out that it wasn’t an official audit, and wasn’t conducted in accordance with “Generally Accepted Accounting Principles” or “Generally Accepted Auditing Standards.”
What’s your take? Does the release of 250 million new USDT coins indicate market manipulation or renewed enthusiasm for cryptocurrency?
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