Is Tether Behind This Bitcoin Bull Run? $600 Million USDT Minted May Have Boosted BTC Price
- Will Harborne says they offer services to large investors and traders
- Tether is the largest stablecoin in the market
During the last month, there have been $600 million worth of Tether (USDT), the most popular stablecoin in the cryptocurrency market. This calls the attention of many investors that believe that the funds were created when Bitcoin (BTC) surged and surpassed $11,000 a few days ago.
Which Is Tether’s Influence In The Market?
During a conversation with Decrypt, Will Harborne, the founder of Ethfinex a subsidiary of Bitfinex, said that when there is a large Tether printing is because there are investors that are entering the market and want to place their funds in the space.
In general, large holders prefer to use Tether to move funds across exchanges and have a hedge against volatility in the space.
Due to the fact that users need to have at least $100,000 to purchase USDT through Tether’s website, this creates the large numbers that many individuals and analysts see.
Tether has to create a new batch of Tether that requires key members to sign off with their public keys, according to Mr. Harborne. This takes time and it is the reason why investors’ demands are usually aggregated into large batches.
As the pre-orders enter the market, it has a positive effect on Bitcoin, Litecoin and other cryptocurrencies that these investors want to purchase. Harborne commented about it:
“[Tether] essentially just ‘pre-creates’ the blockchain tokens based on a rough projected demand. Usually, customers don’t just send $5 million without pre-notifying Tether. So tether can know it’s going to roughly need about [for example] $250 million over the next few days. But then once the money arrives via wire transfer the actual Tethers get sent to the customers.”
For example, Etherscan shows that 600 million USDT were printed between May 25 and June 25, as Decrypt shows. These coins were released slowly at the end of May, which helped Bitcoin experience a gradual move up. After it, more tranches of tethers were minted and released, which helped the Bitcoin price move from $8,500 to $11,000.
Harborne explains that most of the buyers of USDT are large over the counter (OTC) trading desks that sell large amounts of funds to investors or large scale traders. Nonetheless, he didn’t provide more information about the buyers and sellers of Tether in the market. There might be also some traders that want to squeeze leveraged short-sellers on dedicated exchanges such as BitMEX.
According to the Twitter user Bitfinex’ed, the company issues Tether to their traders to manipulate the market and pump and dump specific coins. He said to Decrypt that the funds issued are paid later with the profits made in these trades.