What role does Tether play in this sell-off?
The crypto market as a whole has already lost massive value this year. On January 1, Bitcoin had a price of more than $46k while today Bitcoin is at just around $19k. The second largest cryptocurrency Ethereum is no different.
For a long time there have been doubts about the backing of Tether. While Tether used to claim that all tethers are baked 1:1 with dollars, this claim disappeared from the website a quite some time ago.
Tether website (2017), source
Today, the website says the following:
So only a very small portion is actually in the form of cash. However, the much larger part consists of commercial paper and U.S. Treasury Bills. Since the traditional stock markets are also facing a big sell-off, the question is of course how safe Tether's commercial papers still are.
In any case, many market participants have already started exchanging their tethers back for USD. While on January 1 there were still $78B tethers in circulation, today there are only $66B.
If Tether is really afraid of not having enough liquidity, we can assume that they have also started to sell their cryptocurrency reserves to protect themselves against the falling prices. Assuming that the 6% included under other investments are cryptocurrencies, this represents a good amount of money. So it's quite possible that Tether is helping to bring down the crypto market as a whole.
What do you think about the whole situation with Tether?
Posted Using LeoFinance Beta
