Popular stablecoin, USDT, pegged to the price of one U.S. dollar, has just granted another 250 million tokens, adding to the discussion surrounding this often controversial crypto asset.
The Tether ‘Controversy’ Continues
Despite its widespread use, Tether has been the topic of controversy within the cryptocurrency community, as users speculate about the legitimacy of the project.
However, a recent report released by a U.S-based law firm has produced documents that verify that Tether has the U.S. dollar reserves to back its 2.7 billion USDT tokens. It would not be logical for the Tether organization, which holds close-connections to the Bitfinex exchange, to issue fraudulent funds just after an audit was completed.
With this grant, the stablecoin has now reached a market cap of $2.7 billion dollars, accounting for just over 1% of the collective value of all cryptocurrencies. Although Tether is by no means the largest cryptocurrency, research originating from the University of Texas alleges that the price of cryptocurrencies was manipulated by the movement of Tether tokens.
Research claims that there was an eerie correlation between substantial price action seen in top cryptocurrencies and the issuance of USDT, with Tether manipulation reportedly accounting for up to 50% of all Bitcoin price increases seen last year. These claims have not been directly addressed by the Tether organization, but it is clear that it holds large amounts of influence over the cryptocurrency industry.
With such influence over the market as a whole, users have wondered when Tether was going to reach the top 10 assets on CoinMarketCap, as it slowly moved up to the 11th spot over the past months. Some critics of this project believe that a stablecoin should not be in the top 10, as they think that other projects hold more value in comparison to such a simple asset. However, Tether is now only $80 million dollars away from ousting Tron from the coveted top 10 spot on CoinMarketCap.
It is likely that the Tether organization will continue to ‘print’ USDT as the industry garners more financial support, but will it outpace the growth of the top 10 cryptocurrencies? For now, no one is all too sure.
Market Jumps, Finding Support at Higher Levels
Immediately after 250 million USDT were granted, buying volume pumped, moving Bitcoin upwards by over $150 within 30 minutes, as seen in the chart below. Altcoins followed Bitcoin, seeing similar rises of similar percentage within the same time period.
This has become a common sight to see, as many investors see large USDT issuances as a bullish sign for the cryptocurrency market. Tether’s last large grant, which occurred in mid-May, saw the cryptocurrency market react similarly, as Bitcoin also rose $150 at the time. Charlie Lee acknowledged this in a tweet made earlier today, saying:
“Generally, this has been a precursor of price going up. Tether gets printed when people deposit USD and get USDT back. This USDT will then be used to buy crypto.”
Generally, this has been a precursor of price going up. Tether gets printed when people deposit USD and get USDT back. This USDT will then be used to buy crypto. This is similar to someone depositing $250MM to exchanges. Of course, that doesn’t mean they will buy right away. DYOR https://t.co/zg2PEjGohv
— Charlie Lee [LTC⚡] (@SatoshiLite) June 25, 2018
The cryptocurrency community hopes that this bullish sentiment remains, as the issuance of this stablecoin signals more trust (and capital) put upon this growing industry.