Is Tether (USDT) Behind the 2019 Bitcoin Price Rally?
Tether, the business behind the stablecoin USDT, has actually sparked a substantial quantity of controversy in the crypto community.
Due to the outrageous past of the firm, as well as accusations that Tether had manipulated the 2017 Bitcoin surge and the truth that the business printed $150 million USDT in June, lots of people in the crypto community are presuming that the stablecoin issuer is “playing” with BTC’s price (again), artificially elevating it with USDT tokens.
— Crypt0cracy (@Crypt0cracy) July 2, 2019
No Audits And Alleged Market Manipulation
To analyze the perspective of those who accuse Tether of managing BTC price, it’s time to check out the firm’s past.
First off, it is safe to say that, in spite of declaring that its coins are 100% backed by USD reserves (till the company altered its terms in March), Tether had never finished a full audit of its reserves by a third-party company.
Moreover, following pressure from the community as well as the Commodity Futures Trading Commission’s (CFTC) subpoena, Tether general counsel Stuart Hoegner mentioned in May that the company’s USDT tokens are just 74% backed by genuine USD reserves.
In extension to that, the “Paradise Papers” leak by the International Consortium of Investigative Journalists’ exposed that the stable coin company Tether and the cryptocurrency exchange Bitfinex assign the exact same CEO, CSO, and CFO.
Because of these circumstances, Professor John Griffin at the University of Texas and graduate trainee Amin Shams published a research study paper in June 2018, mentioning that Tether and Bitfinex interacted to artificially enhance Bitcoin’s price throughout its 2017 bull run.
Taking all the rumours of the firm into account, it is a sensible response from the crypto community to suspect that Tether is behind the prevailing BTC bull run. Specifically when Bitcoin’s price starts an uptrend 10 minutes following the company had actually printed $100 million tether tokens.
Kraken CEO: Bitcoin price is driven by real demand
On the other hand, another section of the crypto community is stating that Bitcoin has real demand with that being the factor for the present price rally rather than Tether’s alleged market adjustments.
The CEO of popular cryptocurrency exchange Kraken, Jesse Powell, shares the same view.
“I don’t have inside knowledge of what’s happening at Tether, but I can tell you that, historically, when you’ve seen growth in the supply of Tether, we’ve seen growth in the supply of U.S. dollars coming onto Kraken. And other exchanges would report the same,” Powell said in an interview with Forbes.
Powell specified that Tether is “a far more transparent variation of what’s happening on all the exchanges when the Bitcoin price is increasing” and, unlike Tether, “regular” USD deposits getting here on exchange bank accounts do not exhibit on public blockchains.
“I don’t feel like Tether is artificially inflating the price of bitcoin. I think Tether is actually a small part of the total fiat supply among all the exchanges,” Powell added.
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