Tether price drops below 96 cents
Image source: pixabay - TBIT
US dollar-pegged cryptocurrency, Tether, no longer holds its position as a 'stablecoin' after a 6 percent drop. The news has confused crypto investors, who observed Bitcoin price discrepancies between exchanges that supported USDT or not. Specifically, Bitcoin eclipsed $7,200 on Bitfinex, Kraken, Binance, and OKEx, platforms that support USDT, while Bitcoin remained above $6,700 on non-Tether-enabled platforms. Source: newsBTC - Chong.
Performing as a self-proclaimed 'stablecoin', Tether has pegged their prices to the US Dollar at $1.00. There were no sudden drops in the past since April 2017 when prices fell to 92 cents. Alex Kruger, a market analyst, noticed the price disparities between Bitfinex and Coinbase and quickly posted the observation onto Twitter.
Based on the ongoing doubts whether Tether had sufficiently backed their cryptocurrency with actual fiat US dollars, a major sell-off or cash-out for USDT may have occured.
“USDT crashing, 0.94 handle, helping to push all cryptos higher… It would be quite an irony if a Tether collapse would send bitcoin out of this bear market.”
Source: newsBTC - Chong
Image source: coinmarketcap - Tether.
Prices for Bitcoin as well as other altcoins have surged up by 8 to 10 percent, sending Bitcoin prices close to $7000. Tether on the other hand, sees a drop by of 2.5 percent in trading, lowering the USDT to 93 cents.
As discussed on Fortune - Meyer, Tether's CEO also happens to be Bitfinex's CEO, where Tether would send all of its freshly minted tokens to Bitfinex. When they get there, the price of Bitcoin tends to go up, suggesting Tether tokens are being used to buy Bitcoins.
Tether's claims to be fully back by US reserves that would match the circulating supply of USDT. They have been repeatedly questioned by experts in the field:
"There is concern about tether and whether it is truly backed by dollars and rumors about USDT (tether) being delisted from various exchanges," Charles Hayter, the chief executive of comparison site CryptoCompare, told CNBC in an email.
Source: CNBC - Browne
Image source: Gemini.com
Alex Kruger also noted that newer, better regulated stablecoins are moving in to replace Tether. Audited and licensed stablecoins could potentially bring greater stability to the coin market. These 'trusted' coins include US-based exchange Gemini Dollar (GUSD), Goldman Sachs-backed USD Circle (USDC), Andreessen Horowitz-supported TrustToken (TUSD), and Paxos's coin (PAX). Source: CCN - Young.
If the companies suspect their stablecoins are being used for illegitimate purposes, then they have the power to seize or destroy those coins.
Source: Bitcoin Exchange Guide
Stricter KYC checks would meant that these new stablecoins could have significant control over how they are being used. However Tether still controls more than 98 percent of the stablecoin in the market. We might expect more coin shifts out of Tether in the months to come towards better regulated stablecoins. Read more on: Bitcoin Exchange Guide