Tether, when introduced, was expected to work as a stable coin in the true sense and provide traders shelter when the markets were volatile. But soon the stable coin, with negative news around it, has become a big concern for traders as there is rising distrust among traders regarding their actual backing by a dollar.
Monday, October 15, 2018, saw a sudden rise in prices cryptocurrencies while Tether languished, loading some traders with losses while propelling Bitcoin to its biggest gain in more than three weeks. Tether, the so-called stable coin used as a substitute for the U.S. currency on crypto exchanges around the world, broke its pairing with the USD dollar and slipped to as low as 85 cents clearly showing rising distrusts among investors. The so-called stable coin touched 85 cents on U.S.-based venue Kraken. Transactions on Binance, one of the world’s most active platforms for Tether, recently implied a price of about 96 cents, according to CoinMarketCap.com.
This led bitcoin prices to jump to close to 7000 across the exchange and nearly USD 7400 on Binance as Tether holders shifted into alternative virtual currencies.
While Tether has repeatedly said that its coins are fully backed by dollars, the company has yet to provide conclusive evidence of its holdings to the public. There are also questions about Tether’s relationship with Bitfinex, one of the world’s biggest cryptocurrency exchanges. Some market watchers have alleged that trading in Tether’s coins on Bitfinex, which has the same CEO as Tether, has helped prop up Bitcoin’s price.
Despite having skeptics, Tether’s coins have played an outsized role on cryptocurrency exchanges. They were the second-most traded among all digital currencies after Bitcoin as of Oct. 15, according to data compiled by CoinMarketCap.com. While there are many other so-called stablecoins, none have come close to challenging USDT’s popularity and reach. This has been the major concern with traders that if Tether fails the “Trust Test” it will have a significant impact on the traders that hold it for stability.
Some prominent voices that showed similar concerns on Tether and its sell-off were
“If traders start to flee Tether, it’s a potentially precarious situation,” said Vijay Ayyar, head of business development at Luno, a cryptocurrency exchange to Bloomberg. “It basically implies a lot of volatility ahead.”
Mati Greenspan, the senior market analyst at eToro, also shared the same concern with CNBC over email,
“If the perception that tether can hold a stable value is called into question, traders who are holding USDT are most likely to shift their funds into other cryptos in order to hold their value,”advertisement
CNBC also reported Charles Hayter, the chief executive of comparison site CryptoCompare, views on Tether
“There is concern about tether and whether it is truly backed by dollars and rumors about USDT (tether) being delisted from various exchanges,”
While most traders on the crypto street have been a skeptic and closely watching Tether and its impact, Joseph Young sees this as a positive. He tweeted the following,
While Tether continues to pose a threat of not being completely backed, one may see some pumps in cryptocurrencies as people try to find shelter of safety against the most popular Stablecoin. One will have to wait and see the reaction of the Tether Management.
Do you trust Tether believes its fully backed? Do let us know your views on the same.
The DOGE coin is currently under a short-term sideways trend. For the last four months,…
The XRP coin is currently in a short-term sideways trend. The coin price has recently…
Verlux a Cardano Based Cross-Chain NFT Platform has begun its seed sale on Cardano, which…
The COTI coin price indicated another bearish reversal when the price was rejected from the…
The STX coin indicates an overall uptrend in its technical chart. On October 18th, the…
As 4JNET’s countdown to open exchange inches closer to its end, the positive buzz around…