Some people think bitcoin’s spectacular price rise last year was manipulated by a cryptotoken called Tether that’s supposed to be pegged to the US dollar.
Now, an anonymous report answers the question: What would bitcoin be worth without Tether? The answer: around $4,500, based on the current bitcoin price of about $7,600.
Tether is a crypto token, or coin, that’s supposed to be pegged to the dollar and backed by real dollar reserves in a bank account somewhere. Tether’s coins are often used for dollars on cryptocurrency exchanges because of the reserve claim.
Traders use Tether’s coins to cash in and out of bitcoin quickly, avoiding the lengthy process of converting the sums in and out of fiat currency. However, Tether hasn’t provided audits to prove its reserves exist.
The uncertainty surrounding Tether has made crypto investors uneasy, an unease that became alarm when Bloomberg reported that Tether was subpoenaed by the US commodities trading regulator in December. Bitcoin’s price has fallen about 25% since that news broke.
A group of investors called the 1000X Group, who look for the next big crypto hit, recently commissioned a report to determine Tether’s influence on the bitcoin price.
Based on publicly available information, the report found that bitcoin’s price rose about 40% in the two-hour windows after each batch of newly issued Tether coins arrived at the exchange Bitfinex’s digital wallet, between last April and this January.
The author claims anonymity because of fear of “backlash” from expressing an “unpopular opinion.”