[2018-08-25] $500 Mln Tether Issued in August Is Not Impacting Crypto Markets

[Thadeous]

Bloomberg: More Than $500 Mln Tether Issued in August Is Not Impacting Crypto Markets

New issuances of stablecoin Tether (USDT) are not currently affecting the prices of either major cryptocurrencies or smaller altcoins, Bloomberg reports August 24.

In the article, Bloomberg noted that the allegations that Tether has been used to manipulate or stabilize the price of Bitcoin (BTC) — previously put forward in a paper from the University of Texas — are not holding true for the crypto markets this August.

The paper, published in mid-June, had claimed that Bitcoin reached its all-time high of $20,000 due to price manipulation involving both Tether and sixth largest crypto exchange Bitfinex, which is reportedly “the only direct client” of Tether.

In a June article, Bloomberg had noted that the research paper used 87 examples of the largest purchases of Tether with BTC from March 2017 to March 2018, finding that although they accounted for “less than 1 percent of the time period examined, they amounted to about 50 percent of Bitcoin’s compounded return over that year.”

In this week’s article, Bloomberg noted that the findings made in a recent research paper by blockchain research firm Chainalysis claiming that Tether has been increasingly impacting the prices of smaller cryptocurrencies, such as EOS and NEO, instead of major cryptos such as Bitcoin, Ethereum (ETH), and Litecoin (LTC), are not true for August.

Chainalysis Tether Price Correlation With Crypto Markets Chart. Source: Bloomberg

Bloomberg writes that Tether has issued over $500 million worth in new tokens in August, according to Omniexplorer data. However, “not even more than half a billion” in new USDT has been able to make any impact on the price of EOS and NEO this month, Bloomberg stated, citing that the altcoins have dropped 37 and 44 percent this month respectively.

Bitcoin has also seen a drop of around 19 percent on the month, with Bloomberg noting that August’s Tether issuance is a “move that in the past would have often coincided with a rally in Bitcoin.”

In July 2018, Bloomberg had posted another article on Tether’s price manipulation, focusing on the Kraken crypto exchange and implying that daily tradings amounts on Kraken should be influencing the price of USDT. Instead, as author pointed out, the cryptocurrency remained relatively stable, which was considered by “experts on market manipulation” as a “red flag.”

Kraken refuted Bloomberg’s claims shortly after, stating that Bloomberg’s writers “fail to comprehend basic market concepts such as arbitrage, order books and currency pegs.”

Source: https://cointelegraph.com/news/bloomberg-more-than-500-mln-tether-issued-in-august-is-not-impacting-crypto-markets

[bbc.reporter]

Everyone should read Kraken's article disproving the news media's clickbait and the scientific paper FUD that USDT is printed to manipulate bitcoin.

In any case, I have already told everyone. USDT is issued when the price of bitcoin falls because there is more demand for USDT. Also when there is more demand for USDT, there should be more supply to maintain the $1.00 peg.

[jjacob]

It would be better to post the original Bloomberg article, rather than the Cointelegraph one.
https://www.bloomberg.com/news/articles/2018-08-24/not-even-515-million-in-new-tether-can-help-this-crypto-dump?srnd=cryptocurriences

Everyone should read Kraken's article disproving the news media's clickbait and the scientific paper FUD that USDT is printed to manipulate bitcoin.

In any case, I have already told everyone. USDT is issued when the price of bitcoin falls because there is more demand for USDT. Also when there is more demand for USDT, there should be more supply to maintain the $1.00 peg.

I agree with you that is how the peg should be maintained in the ideal case. New USDT should be issued in exchange for dollars, and the dollars should be held safely by the Company issuing the USDT. It is the latter part of the equation that people are not certain about.

[audaciousbeing]

With a market capitalization of $217 Billion, an injection of $500 millon worth of Tether represents only 2% of the entire market which to me is not enough to be responsible for the push significant enough to attract the attention that could cause the kind of controversy that was faced in the crypto world in the early part of the year.

As rightly stated in the article, this is testimony to show that Tether is not being used to manipulate the price of bitcoin. For me, I think beyond that, it really shows how difficult it is to really influence the price of bitcoin ($500 million is not a small amount of money) and more than the necessary accolades have been accorded to the 'whales' to have been responsible for the happenings in the crypto market. The point is, the majority of market participants have a lot to do in determining the price. The moment there is a surge in price as a result of some new injections, the moment the community are ignorant about it or choose to be ignorant, the effect does not matter unlike the period where everyone just continue to fall in line which is part of the reasons responsible for the all time high in 2017.

[1Referee]

With a market capitalization of $217 Billion, an injection of $500 millon worth of Tether represents only 2% of the entire market which to me is not enough to be responsible for the push significant enough to attract the attention that could cause the kind of controversy that was faced in the crypto world in the early part of the year.

The market cap being $217 billion doesn't mean anything on its own. You only need to manipulate Bitcoin's price through a leading exchange and the whole crypto market will react to that. On an exchange as Bitfinex $100 million is enough to get the price to nearly double in an instant from current levels, and considering that most of the sell orders belong to whales anyway, the money spent to pump the price largely returns to them. This just shows how empty this whole market cap thingy really is.

$500 million is enough to stimulate another bull run. If the first part is done right, you'll have retail investors further boost it to whatever insane levels.

This whole USDT manipulation saga however is just the mainstream media trying to talk down on Bitcoin. In all cases they are just looking for reasons to point out how fake Bitcoin's increases are and that it can only increase through manipulation. They'll do everything for some ad pennies.

[bbc.reporter]

It would be better to post the original Bloomberg article, rather than the Cointelegraph one.
https://www.bloomberg.com/news/articles/2018-08-24/not-even-515-million-in-new-tether-can-help-this-crypto-dump?srnd=cryptocurriences

Everyone should read Kraken's article disproving the news media's clickbait and the scientific paper FUD that USDT is printed to manipulate bitcoin.

In any case, I have already told everyone. USDT is issued when the price of bitcoin falls because there is more demand for USDT. Also when there is more demand for USDT, there should be more supply to maintain the $1.00 peg.

I agree with you that is how the peg should be maintained in the ideal case. New USDT should be issued in exchange for dollars, and the dollars should be held safely by the Company issuing the USDT. It is the latter part of the equation that people are not certain about.

Agreed. But that is another story. What the mainstream news media, and also most of the supposedly cryptoinformed bitcoin news media, together with those scientific researchers are doing is make FUD that those USDT issued are made to pump bitcoin, which is not true.

[registrio]

It would be better to post the original Bloomberg article, rather than the Cointelegraph one.
https://www.bloomberg.com/news/articles/2018-08-24/not-even-515-million-in-new-tether-can-help-this-crypto-dump?srnd=cryptocurriences

Everyone should read Kraken's article disproving the news media's clickbait and the scientific paper FUD that USDT is printed to manipulate bitcoin.

In any case, I have already told everyone. USDT is issued when the price of bitcoin falls because there is more demand for USDT. Also when there is more demand for USDT, there should be more supply to maintain the $1.00 peg.

I agree with you that is how the peg should be maintained in the ideal case. New USDT should be issued in exchange for dollars, and the dollars should be held safely by the Company issuing the USDT. It is the latter part of the equation that people are not certain about.

Agreed. But that is another story. What the mainstream news media, and also most of the supposedly cryptoinformed bitcoin news media, together with those scientific researchers are doing is make FUD that those USDT issued are made to pump bitcoin, which is not true.

Of course it is true. It is all about maths, the correlations are too big. Tether inject billions of fresh dollar to pump the bitcoin price. 25th of august, 500 Millions of $ have been printed. Who the f*ck will invest a half-billion $ in the middle of the summer ? Of course this time they pumped EOS to put up a smokescreen. It is now a fact that Tether manipulate the prices to make profit on naive investors.

[stompix]

With a market capitalization of $217 Billion, an injection of $500 millon worth of Tether represents only 2% of the entire market which to me is not enough to be responsible for the push significant enough to attract the attention that could cause the kind of controversy that was faced in the crypto world in the early part of the year.

As rightly stated in the article, this is testimony to show that Tether is not being used to manipulate the price of bitcoin. For me, I think beyond that, it really shows how difficult it is to really influence the price of bitcoin ($500 million is not a small amount of money) and more than the necessary accolades have been accorded to the 'whales' to have been responsible for the happenings in the crypto market. The point is, the majority of market participants have a lot to do in determining the price. The moment there is a surge in price as a result of some new injections, the moment the community are ignorant about it or choose to be ignorant, the effect does not matter unlike the period where everyone just continue to fall in line which is part of the reasons responsible for the all time high in 2017.

Why do you start with the market capitalization?
Out of those 217 billion at least 5% of them are thought to be owned by Satoshi, a lot of them are lost forever, another 200 000 are stuck in the MtGox limbo and so on....

Have you seen what triggered the last price? Some measly 2000-3000 sell orders, worth a few tens of millions.
What effect do you think a 50 000 BTC or even a 100 000 BTC sell in a matter of hours would look like? We would be lucky not to hit 1000.

Those 500 million were used to prop the price, not to buy 100 000BTC coins for 5k, but to prop the price for 1 million coins not to be sold 500$ lower.We're deep in bear territory right now and it seems that everything trying to prop the price is failing, honestly, I see no reasons why we will not go even lower.

And lately, it's becoming quite the coincidence that we have a rally every time tether issues new tokens just to fall back in a matter of a week or two to the same price spot.

[senin]

Of course, this was to be expected. Tether can not influence the price of bitcoin and other crypto currencies, since it is strictly tied only to the dollar price. In fact, this is a special kind of crypto currency, which is an intermediate link between the currency and the dollar. It is very convenient when you need to cash out the crypto currency or even transfer to another one, however, there is no direct pair for this.