Tether Limited, the company behind the dollar-linked stable coin Tether (USDT), has announced on Twitter that it has destroyed $300 million USDT.
The stable coin plays a crucial role, acting as a conduit for traders to get in and out of the crypto markets.
🔥 🔥 🔥 🔥 🔥 🔥 🔥 🔥 🔥 🔥 300,000,000 #USDT (300,731,687 USD) burned at Tether Treasury
— Whale Alert (@whale_alert) February 20, 2020
Tether Limited could be Cashing out
By burning $300 million, it appears as if the company is cashing out.
At the time of press, there are over $4.1 billion USDT in circulation.
Coincidentally, this surprise coin burning is when BTC prices are shaky, dropping considerably on the last trading day.
But it isn’t Bitcoin alone. The crypto market is weak and leading tokens have posted near double digit losses after posting impressive gains in the past two trading months.
Is this the end of Bitcoin and Crypto Rally?
Tether Limited decision has sparked fears of further down trend. Usually, when USDT prices are churned from the treasury, it is ideally supposed to be backed one to one with the USD—or any fiat currency or liquid assets.
The more the number of USDT in circulation, the more the confidence from investors, and the higher the likelihood that BTC will edge higher.
When there is the demand for crypto via channels as USDT, trading volumes soar and that consequently lifts prices.
The opposite, given the prevailing sentiment of the masses who are so used to Tether Limited printing money, could signal bears and the end of a three-month rally.
Going forward, this massive liquidation could be a signal of a cooling market and a profit taking as crypto assets drop from late Jan 2020 peaks.
Coin Burn is not a New Phenomenon
This redemption is nothing new in Tether Limited’s history.
— Whale Alert (@whale_alert) January 20, 2020
Although the company has not satisfactorily convinced critics that every stablecoin is redeemable to a dollar because of the peg, it is common for Tether Limited—which has close ties with Bitfinex, to redeem and burn a huge amount of the stable coin.
However, as of now, it cannot be known for sure whether the exchange—Bitfinex, is cashing out, or whether the $300 million is a request from a collective pool for stable coin redemption.
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Dalmas is a very active cryptocurrency content creator and highly regarded technical analyst. He’s passionate about blockchain technology and the futuristic potential of cryptocurrencies and enjoys the opportunity to help educate bitcoin enthusiasts through his writing insights and coin price chart analysis. Follow him at @dalmas_ngetich