The printing ratio of tether to US dollars were supposed to be 1:1. But the current rumor circulating around is that the standards is not maintained and may have enormous effect on the price of bitcoin.
Tether were founded in 2015, and were connected to Bitfinex exchange which are in charge of printing this tether. A recent report on 24 January alleges that tether may not be minted independently of bitcoin price and may be created when bitcoin price is falling (only printing in response to market conditions). But from the rumor that this condition is not maintained. What do you think about tether printing effect on bitcoin price?
My understanding is this, it could be incorrect but it's what I landed on when thinking about it. So let's say initially BTC was at $1000 and then tether was introduced. USDT/USD is 1:1 and so BTC price in USDT is also $1000. Then you begin to print Tether and suddenly given the supply of Tether has increased, its value should fall. Therefore you must offer more USDT to receive 1 BTC, then we may see a price of $1500 USDT per BTC. Given that it is told or accepted that tether is pegged to USD and there is a reserve, the price of USD/BTC in turn will increase. Effectively meaning the BTC price can be inflated by printing more and more tether, essentially creating demand out of thin air.
So if that has been going on then the price could have been artificially inflated, Tether's market cap is only about $2bn but it doesn't take a huge sum of money to move the market.
