Could Bitcoin (BTC) And Tether (USDT) Be Linked in Crypto Market Price Movements?
If Bitcoin (BTC) is the largest crypto in the market, Tether (USDT) is certainly the king of stablecoins. While these two tokens can be considered opposites since one of them is pegged to the U. S. dollar (USD) and the other one is completely detached from the financial market, some rumors indicate that they may be more correlate than people know.
Bitcoin is often considered to be the apex of the decentralized world, which would mean that it has no correlation to fiat, however, a new Reddit post suggests that Tether is being used to pump BTC, which would link the two currencies.
The allegation may sound strange to you, especially because USDT is considered by many to be a simple digital representation of the USD, however, the charts match the growth of the two tokens in usage.
On Reddit chart, you can clearly see that the two markets move together. They spike together and go down together, too. For instance, in July 2018, the crypto market faced a huge fall in prices at the same time that the USDT market faced a severe drop in its market cap from $2.7 billion USD to $2.3 billion USD.
While the prices of USDT don’t really change since the token is a stablecoin, people can redeem them, which takes them out of circulation and diminished the market cap considerably.
Another trend that was seen is that Bitcoin’s price went from $6,000 USD to $7,200 USD back in August, which made the supply of USDT go up as well. This year, the price of BTC skyrocketed and Tether obviously followed it.
When BTC hit its price bottom, USDT also followed and its market cap decreased significantly. This means that both currencies are very linked. If the price of BTC goes up, the supply of USDT goes up as well, and the same happens when prices go down.
Some Theories For Why This is Happening
What can be clearly seen here is that the link exists and that there is a sort of a magnet between the two currencies. However, there are some mistakes in the most common allegations about how this is happening.
For instance, some people believe that this may prove that BTC is linked to the fiat world when it is clearly not. What happens is that USDT tokens are a way for people to invest in the crypto market and BTC is seen as the market itself.
If the market is doing fine, more people will be interested in being of it, if not, then this number will go down as well. This is the main point to be seen here. People use USDT to buy BTC, this is the link. If the market is healthy, they will use it more, while they will stop it when the bear market appears.