Uh oh. Is Tether behind bitcoin’s latest surge?
Tether Is At It Again
Over the years, rumors have swelled that Tether has been tied to bitcoin as a way of boosting its price. University of Texas finance professor John Griffin has put out reports in the past suggesting that the 2017 bitcoin burst we all witnessed was actually caused by traders using Tether – a controversial stable currency – to purchase bitcoin whenever it’s price went down.
Stable coins are those supported by fiat currencies, such as USD, the euro or the yen. As Tether is allegedly backed by the U.S. dollar, whenever someone uses Tether to purchase bitcoin, this inadvertently ties bitcoin to USD as well. Thus, BTC experienced its highest surges three years ago given that Tether was consistently used to buy bitcoin, according to the report.
This has led to questions and concerns regarding potential manipulation, as in 2018, bitcoin experienced a massive drop that saw it lose more than 70 percent of its value by the time Thanksgiving rolled around. Despite a previous spike that took the world’s number one digital asset to $20,000 per unit, it fell to the mid-$3,000 range by the time we were ready to say “hello” to 2019.
At press time, bitcoin is trading for over $8,800, which is rather solid compared to where it was just 1.5 months ago. The currency was trading (briefly) in the high $3,000 range in mid-March thanks to the COVID-19 pandemic, which was striking our markets from every angle. Precious metals, stocks and other assets were dropping like flies, and bitcoin was suffering its worst market conditions since 2018.
Now, however, the currency has picked itself back up again, even spiking to nearly $9,500 last week, but evidence suggests that this likely wasn’t caused by halving anticipation, but rather by a massive Tether transfer that occurred on Binance.
The Malta-based cryptocurrency exchange reports that as much as $50 million Tether was used to purchase bitcoin through its trading platform last week. A few hours later, bitcoin would add approximately $30 billion to its overall market cap. Is this a coincidence? Some analysts don’t think so.
Boosting Production
A Twitter bot known as Whale Alert picked up the transaction. Bitfinex – a crypto exchange associated with Tether – reported:
[On Wednesday, we] witnessed extensive buying activity and the high level of scalability and liquidity evident on our platform made us able to seamlessly service all these requests.
At the time of writing, Tether, Ltd has increased the units it’s producing. Thus far, the company has minted more than $1 billion in additional Tether. The company seems to be planning something big, which means we may see bitcoin pump even more during the next few weeks, though there’s also concern that 2018 could potentially play out all over again.
The post Is Tether Responsible for BTC’s Sudden Jump? appeared first on Live Bitcoin News.
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