Like many clouds did not begin to gather? Are those who claim that the rise of the cryptocurrency market is due to the "pump" of stablecoins right? Fears of Tether crashing.
Stablecoins (cryptocurrencies that have a "locked" exchange rate with another asset of relatively constant value, usually the dollar) took 5 years to reach a market capitalization of 6 billion and only 4 months to double it!
As we can see from the graph, their capitalization from March went to a completely new level. The largest of these, Tether , has become the third largest cryptocurrency in the world. And not only that. The average trading volume is on average similar to that of bitcoin.
Since March 12, when the crypto market plummeted to date, more than $ 50 million worth of USDT has been added each day on average. Because the big numbers are confusing, consider that since the May 11 halving, 900 bitcoins have been generated daily.
At an average price of $ 9,000 per bitcoin, $ 8 million is displayed every day. Tether cuts $ 50 million worth of USDT daily. This means that it has the power to exceed 6 times the new offer and stay and change!
The explosive rise of 2020 is not entirely clear where it's due. The most likely scenario is that this money is waiting to be placed in bitcoin and other cryptocurrencies. Perhaps this increase is due to depositors from countries that find it difficult to obtain hard currency.
Why own Tether and not regular dollars? The main reason is if you think it is not yet time to buy bitcoin or other crypto, but you want to be ready. This way your money is in place, without being exposed to the volatility of cryptocurrencies.
Surely you do not lose with Tether? We do not put our hand in the fire. While until the beginning of 2019 we were assured that there is real coverage in a corresponding amount of dollars, this has changed. Officials now claim that they have 100% coverage of traditional currencies or their equivalents. The reserves may include other assets, as they themselves acknowledge.
New York Attorney General Letitia James last April accused the well-known Bitfinex exchange (aka Tether created by Bitfinex owners) of using Tether reserves to cover $ 850 million in losses, apparently from a company in Panama that had sent them, Crypto Capital.
Eventually the officials admitted that the coverage in dollars is only 74%. The fact is that the market has not shown concern. Tether managers adopt traditional banking practices regarding fractional stocks . What made us suspicious is a strange incident related to one of its founders, Brock Pierce.
Pierce is running for president of the USA! He was repulsed by a call of fate, from what he confessed, because he had played an actor in a movie "First Kid", where he played the son of the President of the USA. The excuse is so funny that it becomes suspicious. Does he want to take advantage of the law that prohibits any judicial investigation of any candidate in the pre-election period?
Under the law, the only exception is to give permission to the Attorney General of the United States, William Barr.
The interesting thing in this case is that in order to lift the ban, it becomes difficult from difficult. Why; Because William is openly at odds with New York Attorney General Geoffrey Berman, the prosecutor who is investigating the case!
What might Brock want to hide? Is there anything wrong with Tether? It is not excluded. The latest in their legal dispute with the prosecution is that they lost an appeal. The appeals court rejected the argument that the court has no jurisdiction to investigate the publishers of Tether because New York traders use Tether while some of the company's employees worked in New York.
Like many clouds did not begin to gather? Are those who claim that the rise of the cryptocurrency market is due to the "banging" done by stablecoins right? So could a Tether "crash" lead to a total collapse?
Professors Richard Lyons and Ganesh Viswanath-Natraj at the University of Berkeley do not seem to share this view. A survey published in April claims that they found no correlation that leads to the conclusion that the issuance of stablecoins leads to the price of bitcoin or other cryptocurrencies. The survey was conducted on behalf of the Center for Economic and Policy Research (CERN).
In our opinion, it might be wise to start worrying when you see Tether trading at a discount against the dollar. This is a sign that confidence in it is beginning to shake.
The news in the crypto market
* Tether and other stablecoins have long been under the radar of international regulators. That is going to change. The Financial Action Task Force, with members from about 200 countries proposing ways to stop money laundering and terrorist financing, said stablecoins must meet their standards.
This means that exchanges and other entities that support them will likely need to verify the identity of their users and comply with other digital asset policies. For serious exchanges - which we strongly recommend you prefer - it is not a serious change. Problem will have smaller ones that have been set up with the main purpose of money laundering.
* The volatility in bitcoin is lower than the S&P, in the last two months. Although many people describe sideways movement as psychedelic, it is not bad to happen from time to time. Gives you the opportunity to make controlled placements. Or leave your post on time, without rushing.
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