Tether Has No Real Impact on Bitcoin price

[Samarkand]

I thought that the latest theory was that Tether was enabling people
from Asia (especially China) to buy cryptocurrencies that had problems
with wiring money to regular exchanges due to capital controls.

It just makes sense if you ask me. People from other countries can easily wire funds to exchanges and have
no need to use Tether as an intermediary. But people from China used Tether as an intermediary
in order to circumvent capital controls.

I used to doubt whether the money to back all outstanding USDT is actually there, but nowadays
I believe that the money is actually there, but it comes from Chinese whales and miners
that can´t fund cryptocurrency exchange accounts. Maybe they are so reluctant to open
their books for this reason.

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[exstasie]

I thought that the latest theory was that Tether was enabling people
from Asia (especially China) to buy cryptocurrencies that had problems
with wiring money to regular exchanges due to capital controls.

It just makes sense if you ask me. People from other countries can easily wire funds to exchanges and have
no need to use Tether as an intermediary. But people from China used Tether as an intermediary
in order to circumvent capital controls.

How does Tether actually allow them to circumvent capital controls? I don't think it does. I don't think Chinese residents can easily fund Tether deposits beyond normal capital controls.

I think the Chinese exchanges just set up offshore Tether exchanges and many Chinese traders moved there. Those traders still need to move money in and out of the BTC market via peer-to-peer markets in China. As far as I know, most BTC/CNY volume has moved to OTC and P2P.

[adaseb]

Being around Bitcoin since 2013. There is never a shortage of FUD drama like the Tether. Especially all the claims by that Bitfinex'ed twitter guy.
All the claims and it was all circumstantial evidence. Nothing solid.

The reason why tether spiked up massively in 2017 was because the price of BTC and other cryptos grew. The crypto market cap went from $20 billion to $800 billion in less than a year. Obviously there are early adopter that want to take profit. Some took profit in USD, EUR,GBP but some took profits in USDT. So the higher the crypto marketcap went the higher the tether market cap went to make enough supply for everybody wanted to cash-out.

[Rune]

Being around Bitcoin since 2013. There is never a shortage of FUD drama like the Tether. Especially all the claims by that Bitfinex'ed twitter guy.
All the claims and it was all circumstantial evidence. Nothing solid.

The reason why tether spiked up massively in 2017 was because the price of BTC and other cryptos grew. The crypto market cap went from $20 billion to $800 billion in less than a year. Obviously there are early adopter that want to take profit. Some took profit in USD, EUR,GBP but some took profits in USDT. So the higher the crypto marketcap went the higher the tether market cap went to make enough supply for everybody wanted to cash-out.

I am not so sure I don't think enough time has passed to see if this last bubble was completely free of a tether push we will see in the coming year.

[bbc.reporter]

thanks for sharing this. the tether drama has been one of the biggest FUDs of last year and it has never made any sense at all, mainly because the whole theory had a lot of exceptions to it that defied the conclusion that it was trying to make.

But to summarize those articles, they illustrated that more USDT are issued during the times when the price of bitcoin was going down because there was more demand for USDT. To maintain the peg of 1 USDT - $1, more USDT have to be issued. That's a simple summary, but the articles also expain the use of arbitrage.

true. generally speaking new tether is issued whenever there is an increase in trading volume because there are more traders and since all of the altcoin exchanges have USDT pairs since they are avoiding fiat and the KYC that comes with it USDT is needed so that people can run away to it and/or use it to transfer funds between exchanges.

although one question rises here. we all know the market enters excited phases when there is a lot of volume (like end of 2017) but it exits them and enters slow mode with lower volume. what i wonder is how tether price remains up with a large volume in circulation but nowhere near the same demand?

Are you asking about how USDT maintains its peg in situations when there is high supply and low demand? Tether.to was a central authority on exchanging 1USDT to $1 and I reckon they still might be. I have not followed the whole story when they lost their banking partners.

In any case, if the peg is still there, maybe they found new banking partners. 

[Phenoca]

Not having to round to the nearest satoshi gives altcoin/usdt trading pairs more liquidity than altcoin/xbt trading pairs, which means more competition.

[beerlover]

For there to be the kind of influence, USDT has to have to same or more popularity as BTC. As it stands for my view, fewer people know USDT. It is natural that the researchers concluded that there is no influence.

There is seriously no real influence as far as I am concerned, and I believe for a while now, people's doubt about tether being printed out of thin air and probably affecting the market has been doused since the whole auditing thing came into show and then I am not sure how they proved it is tied to a real bank account and the amount present therein.

Nevertheless, it is normal for people to always tie things to a bear market anyway, and as far as I am concerned, as long as we get to see real life usage, people will get to find out tether is just a stable currency tagged to fiat and nothing else than that which makes it not to have a direct effect on the price unless the supply itself generally across board is huge than the demand.

[fabiorem]

They were always unrelated. Tether is just a Bitfinex altcoin, in the same way as Binance have its BNB.

But the funny thing about this, is that nobody complains about nation-states printing money without anything to back it, whereas if a private company do the same, its a storm of FUD. Food for thought.

[rickadone]

Do you remember the waves of people (including me maybe) saying some time ago that the price of Bitcoin is related to Tether (Is Bitcoin Really Un-Tethered?)

There is an academic study by a university researcher debunking the claims. It used VAR model (Vector autoregression) The study claims there is not any strong evidence between Thether and the Bitcoin's rally in 2017
https://www.ccn.com/tether-no-real-impact-on-bitcoin-price-university-researcher/

Since for a while now, there has been some proof that the amount of tether one way or the other is tied to the exact amount available in fiat normally in the bank, I have always believed it does not really have much of an impact on the price unless of course we get to see some shady stuff happen in the long run when it comes to tether printing and then the current amount available based on auditing.

Demand should always affect bitcoin value and not tether, with tether just being only a medium to hedge one's fund in this equation, so I see no reason why the real impact should be there in the first place.

[Stedsm]

I believe it's not true at some pace of time, because whenever bears tried to dump on Bitcoins, there used to be some news show up as a surprise that a few million tether has been printed (produced) and added to the circulation which made the markets move in a rising star way. Tether sometimes used to affect Bitcoin and some major alts' (such as litecoin and ethereum) price in a way that can't be denied. In Wei's words in the "No Pump found" paragraph: "However, you cannot use trading volume to predict price, as the effect is simultaneous. In my paper, I state that past trading volumes do not impact future returns.” To some extent, it may be concluded that past had those inflation attempts which could or couldn't be seen in future.

[exstasie]

They were always unrelated. Tether is just a Bitfinex altcoin, in the same way as Binance have its BNB.

Sort of. Except BNB is not interchangeable with fiat money and it has a fixed supply. On Bitfinex, USDT is interchangeable with USD and it has an elastic supply.

Running an ICO doesn't seem as concerning as exchanges printing USD and turning their books into fractional reserve.

But the funny thing about this, is that nobody complains about nation-states printing money without anything to back it, whereas if a private company do the same, its a storm of FUD. Food for thought.

I always see bitcoiners are complaining about fiat money printing.

[aqila baruroh]

more precisely the price of bitcoin has no effect on Tether's price, the price of the Tether is never far from $ 1. a large volume makes this coin very appropriate to invest.

[1Referee]

Demand should always affect bitcoin value and not tether, with tether just being only a medium to hedge one's fund in this equation, so I see no reason why the real impact should be there in the first place.

It does so indirectly. As long as USDT hasn't been sold back to Bitfinex for USD, there is always capital ready to be put to work, while with fiat it's far more likely that it gets withdrawn back to people's bank accounts, meaning that money has left the market for real and won't be put back into action so easily. It's definitely a stimulating factor for crypto in general.

more precisely the price of bitcoin has no effect on Tether's price

It doesn't. What does affect Tether's price (locally) is an exchange messing up. WEX is the perfect example of how insolvency can lead to crazy high USDT rates (currently 1USD=0.25USDT) because that's pretty much the only asset users can withdraw occasionally. I'm pretty sure that WEX operators are doing everything they can to exploit the higher rates in their advantage.