Tether which has time and again faced an issue of being subject to manipulation, created serious doubts earlier today. The result of the Tether value not being pegged to the US Dollar led to Bitcoin which has faced a slump rising in price. Sources claim investors are moving funds from Tether to Bitcoin. The main reason is they find the safer and less volatile Tether being untrustworthy as of now.
It was observed that USDT has not remained pegged to the US Dollar in exchanges where USDT is supported. These same exchanges saw a spike in Bitcoin prices, suggesting a movement of funds from USDT to BTC. Example, Kraken had even seen a fall of USDT touching $0.90.
Exchanges which do not support USDT had only witnessed a small rise in BTC comparatively.
Bitfinex, an exchange which supports and shares the same CEO of USDT has faced a number of banking issues. It will be updating on it’s banking situation by next week.
It is not the first time Bitfinex has been seen to use USDT to help increase BTC’s price. At the end of 2017, the U.S Commodity Futures Trading Commission sent subpoenas to the Bitfinex and Tether.
As Vijay Ayyar, Head of Business Development at Luno suggested-
“If traders start to flee Tether, it’s a potentially precarious situation. It basically implies a lot of volatility ahead.“
USDT is treated as a stablecoin which means every token is equal to US$1. A volatile market will continue with cryptocurrencies further failing as a reliable financial asset. Thus USDT’s manipulation could affect the market severely.
USDT’s stablecoin competitors gained, with TrueUSD (TUSD) rising to $1.03 and USDC rising to $1.02.
The primary help needed for Tether to regain trustworthiness as a stablecoin depends on the update of Bitfinex by next week. It will either make or break the exchange and Tether as both are seen to face issues of insolvency and fraudulence.
Image Source – Flickr
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