Bitcoin Forum

Been seeing so many different articles on this. Charts show a strong correlation in supply of tether with rise in BTC prices. Is Tether supply and trading a significant driver of Bitcoin prices in 2019 up from $3k level in Dec 2018? If so, how much really [estimates with precision]? And what happens to Bitcoin prices if there's a Tether crackdown or if some other really bad news about Tether hits the newswires?

IMO USDT is one of the tools that help the BTC to move. And there are many coins in the market like it. Probably helps in the price manipulation. However being a widely used stable currency allows us to see it immediately.  BTC is king and it is normal for others to revolve around the king.

Yes, USDT is linked quite strongly to BTC price. Whenever there is an increase in USDT supply, then BTC often surges up in price. Similarly whenever there is uncertainty or potential scandal around USDT, then money flows out of the "stablecoin" and back into BTC, driving the price up.

Recently, an injection of $300m in Tether arguably caused the BTC rise above $6k https://www.newsbtc.com/2019/04/25/tether-treasury-stablecoin-bitcoin-price

And then another injection of $500m arguably caused the next rise above $8k.

There are plenty of articles to Google about this.

It is a common mistake to mistake correlation for causation

In this way, the increasing supply of tethers may in fact mean just more money being injected into crypto through this avenue. In other words, it is not the tether supply itself which is driving prices up but people buying more bitcoins using tethers to bring their dollars to the table. On the other hand, if tethers are in fact printed out of thin air (read, they are not backed by real dollars), then new tethers can be a primary driver for the cryptomarket growth and thus become a reason for, or a cause of, this growth

Although I don't understand what happened to bitcoin some time ago, I think your answer makes sense that there is indeed a correlation between bitcoin and tether. Maybe there is a lot of speculation about bitcoin, but I will look for clarity about this tether and bitcoin.

With how shady bitfinex has been since its inception, there are legitimate reasons for being distrustful of anything they touch/create - especially Tether.

I definitely wouldn't bet my arm on bitfinex not pulling any shenanigans here.

There is a high probability that many investors began to use Tether coin to adjust the course in a big way. Therefore, we see the desired price increase.

Well,  that's what some say but there is no evidence yet to support the claims. It is more like saying that the increase in supply of USD on crypto Exchanges correlate with the rise in bitcoin price. 
It is expected that top coins will increase in price  in bullish markets.

I think both are very separate, especially in giving impact to Bitcoin. Bitcoin in my opinion is really pure from analyzing the situation and also the market fundamentals. Not from more coins especially Tether. Tether doesn't have any role of bitcoin prices

in my opinion it would be appropriate if tether reached the current top price, because you can see that most new exchanges have started using tether as the current central exchange.

Not just tether, that used to be true because tether was the only big one and people were using it to buy or sell bitcoin but still stay in the exchange without getting out but now tether is not the only one, hell with libra it will be even less tether involved.

However, if we are just purely focusing on all stablecoins it is a known fact that not everyone sells their bitcoins and cash out their money to their banks, we even had a time when someone bought bitcoin with 500 million dollars of tether ffs, which means there are actually a lot of people all combined that can affect the increase of bitcoin prices. That is of course not the only reason, there are tons of reasons why bitcoin goes up, this is just another one of those that we can consider as a reason for going up.

From what I have been seeing, it seems like tether was used to manipulate the price of Bitcoin. I have seen a. Lot of news that have been saying this same thing, they all believe that the USDT was actually linked to the BTC price manipulation back in June. And I have also been seeing some people that are saying they will abandon tether and go for other stable coins. Most people don’t trust them any longer after the news of their manipulation popped up and became a discussion online.

Tether is the best option to use for traders/investors because it allows them to transfer fiat from exchange to exchange in a matter of minutes. It doesn't really surprise me that Tether is so popular. Combine large scale adoption plus the fast transfers from exchange to exchange when depositing and withdrawing the ERC20 version, and there you have the most popular stablecoin.

Tether is a great reflection of how much fiat there is circulating. Before the price took a massive dive from $6000 to $3000 last year Tether removed around 850 million USDT from circulation, which should have been a red flag. I saw it but unfortunately ignored it. I'm not making that same mistake again. It's a very important metric to pay attention to.

They do and can print out as much tether as they want to out of thin air.
So it is in fact a money making machine and putting it into cryptocurrency exchanges and transferring it out into BTC would most certainly pump up the price if they do enough trades on bitfinex of where they came from. :-\

A lot of things can be said to explain this phenomenon, but I offer to start by checking whether it's actually the case. I'll be following Bitcoin's price chart on coinmarketcap and Tether's supply chart here (https://blockspur.com/tether/trends/supply) because I couldn't find a better source. November-December 2017: Bitcoin is experiencing rapid growth, and the supply of Tether more than doubles. January of 2018: BTC's price is going down, while the supply of Tether is still increasing rapidly. As for the recent movements - unfortunately, I don't see the chart that explains it. But I see that the correlation is not even always the case, not to mention what deisik says correctly that correlation doesn't equal causation.

I think one crucial information we are forgetting that tether has a lot of trading capital covered in many parts of the world. Stablecoins didn't came out until late in bitcoins and crypto currencies life and after it came out it was almost instantly accepted as the token of dollars just to not cash out like we always do but to keep it in exchanges.

So, that is why right now they are fueling trading instead of just bitcoin prices. When bitcoin volume goes up the price of it usually goes up as well so it has an indirect relation there but I feel like what stablecoins managed more than anything is to keep the volatility in the bitcoin world instead of making us deal with banks, that is why at first it was super loved since it took the place of banks and what else do we love than getting rid of banks :D.

But it may be too late to cry

As the saying goes, generals always fight the last war, and I don't think that cryptogenerals are much different in this regard. What I mean is that Tether is not the only pebble on the beach right now and while two years ago the movement of tethers had been quite representative and telling for the imminent Bitcoin price change (crashes included), that may no longer be the case as there are quite a few competitors to Tether out there these days. I obviously refer to stable coins which every self-respecting exchange on the block feels obliged to issue (what USDT is to Bitfinex)


If so, there should necessarily be consequences and repercussions. If they are really printing tethers out of thin air, they risk insolvency when a lot of people require their USDT tokens (which they received in exchange for their bitcoins) should get converted to real dollars. So far Tether looks okay, though

It seems the correlation has more to do with the growth rate than with the supply. In moments with stagnating or slowly increasing Tether supply, the markets were bearish.

This may be related to the fact that for the Tether issuers, it doesn't make sense to react too fast to the markets' demand for TetherUSD, because if it's only a short-term fluctuation they would have to create Tethers again. So they will always lag a bit behind the real demand evolution. Also, the markets, in strong downward movements also need Tethers due to panic sells at the Tether-listing exchanges.

There are two theories to consider when trying to answer the OP's question about the correlation:
- First, there is the "conspiracy theory", that Tether is created mainly to speculate and to influence the BTC/crypto prices to take advantage of it. It would be part of a pump-and-dump operation.
- Second, there is the "fiat circulation" theory pointed out by 1Referee (Tether as a measure for fiat demand in the market).
Both theories could be supported by the observation that TetherUSD growth seems to be related to the price curve.

However, there is a fact that seems to support the (less problematic) "fiat circulation theory": the evolution of Tether trading volume. It is today much higher than in the 2017 bubble - at least ten-fold, while the Tether supply only doubles the end-of-2017 figure. That is an indication that Tether's supply increase is due to real usage as a trading vehicle, which also corresponds to the observation that the number of exchanges listing Tether has increased.

It acts as a bridge.

Fiat to USDT then Bitcoin.
That is all the usage to it.
Most of the people cannot buy bitcoin directly due to many rules in their country. Now, if all those Tether could just be used to buy bitcoin then we can see what the real price of BTC should be.
For now, let them use it as a trading scapegoat. But somewhere in the near future they will get out and not to fiat but thru bitcoin.

One thing I am aware of Tether is that when we had a huge rally in bitcoin during 2017 there were questionable amount of Tether being generated without any proof and it was a topic during that time and we all know about the court case regarding it, Tether used to manipulate earlier but not certain about the present situation where there was scruituny regarding their business practices.

when you want to come up with an analysis you can't just sweep things that aren't to your liking under the rug and simply ignore them. it is like saying bitcoin is in a downtrend in 2017 and ignore the obvious rise!!!

in this case nothing about Tether supply or its creation has changed over the past couple of years. specifically in 2017 AND 2018 but these two years are exact opposite of each other and none of those shitty articles that you have read about Tether ever mention this because they want to sweep it under the rug!
so unless you can find any logical reason why all these theories they keep publishing for 2017 and 2019 did NOT work in 2018, i am calling bullshit on all of them.

the fact is, Tether doesn't even affect bitcoin price and majority of bitcoin traders are trading bitcoin with fiat and only use Tether in their ALTCOIN trading on ALTCOIN exchanges since most of the bitcoin exchanges don't even have Tether!!!

I also think there is no direct influence of the Tether supply on the BTC price.

However, there is some kind of correlation - in 2018 the Tether supply grew much slower than in 2017, and since the bull market started, the Tether supply growth is rising again. In my opinion, like I wrote in the other post, it's much more likely that it's simply an indicator for "interest" and "activity" in the crypto market.

We cannot also cleanly separate the Bitcoin market from the Altcoin market, as almost all altcoin exchanges (with the exception of token exchanges) are also allowing Bitcoin trading. There are even "almost-pure" Bitcoin exchanges like Kraken that use USDT.