Bitcoin Currencies News & Updates

Tether Implodes!

The price the crypto stablecoin #Tether backed by the US #dollar pegged to $1, has fallen by around 4 #percent in the past 24 hours to $0.96.

As #USDT fell, it became more expensive for traders to purchase major cryptocurrencies like #Bitcoin and #Ethereum with USDT, pushing the #premium of cryptocurrencies up on crypto-only #exchanges like #OKEx and Huobi.

At its peak, the price of #Bitcoin achieved $7,800 on #Monday in Asia.

Why the Tether Sell-Off Could be Good For the Cryptomarket

Ostensibly, In the short-term, the #sell-off and instability of USDT may seem beneficial for the crypto #market due to the #increase in the price of most #cryptocurrencies but in reality, it really is not.

#Bitcoin achieved $7,500 on Bitfinex but the inflated price of BTC by USDT is of less #significance to the #global cryptocurrency #exchange market. It can be argued that the decline of USDT portrayed #lack of maturity and strong #infrastructure in the market, which could push away institutional #investors such as pensions and academic #funds that are interested to commit to the #asset class.

In the long-term however, the decline of #Tether could positively affect the crypto #market as it will lead traders to #regulated, audited, and transparent alternatives like #Gemini Dollar (GUSD), #Paxos (PAX), and #TrueUSD (TUSD).

Already, the #price of TUSD has increased to $1.08, by more than 8 percent, and has risen quite #substantially against #USDT on Binance, which suggests that traders have started to favor newly #emerging stablecoins that have the backing of #banks and authorities.

“Bitcoinland: where a simple filthy #statist buck is ‘worth’ $1.08 on an exchange… because #reasons. If you are #wondering what this means: there are two ‘synthetic dollars’ being #traded against one another here: #TrueUSD and Tether the #fact that they aren’t trading at $1.00 is because someone (#Bitfinex, owner of Tether Ltd) is having #bank account / liquidity problems,” Post Oak Labs founder Tim #Swanson said.

Since 2014, Tether has provided #cryptocurrency-only exchanges an alternative to the US #dollar with which traders can hedge their #positions to the stability of the US dollar. Prior to 2018, there were no #alternatives to USDT, forcing the #industry to depend on USDT as a widely accepted #stablecoin.

But, as cryptocurrency #analyst and trader Alex #Krueger has told in an exclusive #interview, Tether’s lack of transparency and opaque #operations poses serious issues for #traders. For instance, at this point, it remains unclear whether #traders can redeem USDT at a 1:1 ratio to the US dollar, due to the #collapse of #Noble Bank, Tether’s partner #bank.

“Both, Gemini and #Circle are US based regulated #issuers and thus perceived as more #trustworthy, carrying lower ,credit-risk. One should expect a great #percentage of all USDT (Tether) #holdings to migrate to #GUSD (Gemini) and #USDC (Circle),” #Krueger said.

What’s Next?

Bitfinex has clarified that it has obtained the #approval of its bank to enable fiat deposits and #withdrawals in the next 24 hours. It is possible that the #statement of Bitfinex could lead to the #stabilization of USDT.

Featured image from Shutterstock.

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