Bitcoin Gains Correlate With Tether Issuance, Researcher Says

[alyssa85]

See

https://www.bloomberg.com/news/articles/2019-10-03/bitcoin-gains-correlate-with-tether-issuance-researcher-says

It’s becoming a little clearer just how much the stablecoin Tether contributed to the rally that saw Bitcoin more than double in value this year.

On days that new Tether tokens are issued, Bitcoin increases in price as much as 70% of the time, researcher TokenAnalyst calculated. Since about $2 billion of Tether was issued this year, it was likely a significant factor.

Tether has been at the center of controversy since it was introduced as a way to provide liquidity in the more than $200 billion digital-asset market, where lingering concerns about illegal uses have made it difficult for many exchanges to secure banking services. New York’s attorney general in April accused the companies behind Tether of engaging in a cover-up to hide losses and co-mingling client and corporate funds.

Why and when Tether is issued is often a mystery, with officials of the private company saying the tokens are minted to meet orders from larger customers. In countries like China, where crypto exchanges are banned, people can pay cash over the counter to get Tethers with few questions asked. From there, they can trade Tethers for Bitcoin and other cryptocurrencies.

Tether can come into circulation on a number of digital ledgers, called blockchains, and the origin matters. Following issuance of Tethers on the Ethereum blockchain, as so-called ERC-20 tokens, the price of Bitcoin moves up 70% of the time, TokenAnalyst found. On Omni, which is linked to the Bitcoin digital ledger, the price of Bitcoin moves up 50% of the time, the researcher found.

“I think the discrepancies are appearing recently primarily because Tether on ERC-20 is just much easier than Tether on Omni to use as a means of transferring value quickly,” Sid Shekhar, co-founder of TokenAnalyst, said in an email. “Ethereum is a speedier chain than Bitcoin. As Tether is primarily used as a way to realize gains and get in and out of volatile crypto-asset positions in times of market movement, the speed of transferring into/out of it is critical.”

The data could make it easier to predict future price moves.

“Traders can leverage this knowledge by tracking mints and burns of the ERC-20 Tether token as it’s closely tied to movements in Bitcoin prices,” Shekhar said.

The thing is - there is a lot of real money being exchanged for bitcoin too, especially people cashing out everytime there is a spike, and people are obviously using real money to buy Tether in the first place, so it's not clear exactly what role Tether plays in bitcoin's spikes.

[figmentofmyass]

The thing is - there is a lot of real money being exchanged for bitcoin too, especially people cashing out everytime there is a spike, and people are obviously using real money to buy Tether in the first place, so it's not clear exactly what role Tether plays in bitcoin's spikes.

tether being printed is the equivalent of fiat money being wired to a bitcoin exchange [to buy bitcoins]. it signifies growing demand. price is determined by supply and demand, remember?

as a trader, i always wished i had access to fiat inflow data of exchanges because it would tell you about buying demand and whether it's rising or falling. tether issuance/burning is about as close to that as you can get. it's a pretty great indicator, as the data suggests.

[dothebeats]

At this point, Tether being minted at a speedy rate indicates growth and demand, while to some, it's a useless correlation until they see huge price swings on the green side. While the latter statement may be true to some extent, I still believe that Tether being printed that fast is a good thing, since this is mainly used for transfer of value in-between exchanges. And why would one transfer USDT from one exchange to another? To capitalize on spot market prices on several platforms, and that tells you that people are interested to buy.

While I still can't forget the issue about USDT being un-backed by real USD reserves, one can't deny the fact that it has helped bitcoin move to certain directions that most of us enjoyed.

[Wexnident]

Tether has a fixed value so it isn't affected by how volatile the market of bitcoin is. By issuing new Tether, it signifes the increase in price of bitcoin to cater to the fact that the supply of coins that could buy bitcoin increased.
The existence of Tether is a great help since its like a bank but for crypto instead where its value would never depreciate and only you can have access to it and can use it whenever you want. It also shows you how the market changes, whether be it on increase or decrease, since having a fixed value comparison to changes to other coins can easily show how much the market changed.

[alyssa85]

tether being printed is the equivalent of fiat money being wired to a bitcoin exchange [to buy bitcoins]. it signifies growing demand. price is determined by supply and demand, remember?

as a trader, i always wished i had access to fiat inflow data of exchanges because it would tell you about buying demand and whether it's rising or falling. tether issuance/burning is about as close to that as you can get. it's a pretty great indicator, as the data suggests.

But has anyone ever cashed out tether for fiat? That would be the real indicator of actual money behind it. Otherwise it can look like  token designed to flatter bitcoin's popularity.

[hugeblack]

But has anyone ever cashed out tether for fiat? That would be the real indicator of actual money behind it. Otherwise it can look like  token designed to flatter bitcoin's popularity.

It’s the first time that I know people buying tether to get Bitcoin.
Stable coins are currencies whose real value is zero and they are used only within the platforms as a tool to infuse speculation when there are large fluctuations.
exchanging cash for stablecoins is support for these companies to continue to get more cash and Bitcoin.

Governments should impose regulations on fiat ---> stablecoins exchange because they are linked to the banking system rather than cryptocurrencies "where they claim their value is one USD."

In spite of what I said, I do not deny the role of it in the prosperity of crypto technology, which contributed significantly to boost the confidence of speculators by ensuring that they get their money "stabilize value" without conversion to cash.

[magneto]

I think the relationship between Tether and BTC prices is one that has been always quite stressed, but never actually proven. Correlation doesn't equal causation.

Increased supply of tether could be as a result of increased demand for funds to move into stablecoins from fiat in the first place to buy BTC more conveniently, which in itself may correlate Tether issuance with BTC price, but really the demand isn't coming from the increased supply of Tether - but rather the person who wanted to buy the Tether to exchange to BTC in the first place.

Essentially, Tether in this case is just a vessel. And there can be many vessels for transacting and many forms of stablecoins, not just limited to USDT.

[stepwilli]

Additionally, even if tether was printed out of thin air without any dollar backed, it just means that tethers value will drop eventually when that turns out to be true, not bitcoins price.

Bitcoin price only goes down or up when people buy or sell, there is no other financial reason for bitcoin to go up or down, just market itself can decide that. So long story short bitcoin will be doing whatever it wants no matter what people do with tether.

If people print tether and use that to buy bitcoin that is great, if people wire money directly from their bank account and buys bitcoins that is fine as well, if people go to ATM machines and buys bitcoin that is cool too, doesn't matter how people buy bitcoin as long as they keep buying, its when they sell that creates issues and if people can't cash out tether than they won't use that option.

[alyssa85]

Additionally, even if tether was printed out of thin air without any dollar backed, it just means that tethers value will drop eventually when that turns out to be true, not bitcoins price.

If it was really dollar backed, you would be able to exchange tether for dollars. But on the tether website the facility to exchange for dollars is "temporarily disabled".

Which means tether has a dollar value only as long as people believe it does. As soon as they stop believing, it should drop.

[elda34b]

Which means tether has a dollar value only as long as people believe it does. As soon as they stop believing, it should drop.

Tether has a lot of conspiracy surrounding them, and it's not just empty words, some are facts, and it's hard to debate that.

I do believe that USDC or other coins would eventually replace USDT, especially if they keep being shady like this. Bitfinex suspending withdrawals won't help them either.

[bryant.coleman]

I don't know how these ""researchers" come up with such idiotic findings. From what I have seen, Tether is one of the factors behind the recent bearish trend affecting Bitcoin. Earlier, traders used to convert their useless alts to Bitcoin, to save their wealth. Now they are using USDT instead, as it is having a stable exchange rate. The trade volume involving Bitcoin has gone down, partly due to USDT/Altcoin trades now growing in popularity compared to BTC/Altcoin trades. This is what I have seen myself and this is what my 7 years of experience tell me. I don't need any researcher to teach me what is going out there.

[electronicash]

Additionally, even if tether was printed out of thin air without any dollar backed, it just means that tethers value will drop eventually when that turns out to be true, not bitcoins price.

If it was really dollar backed, you would be able to exchange tether for dollars. But on the tether website the facility to exchange for dollars is "temporarily disabled".

Which means tether has a dollar value only as long as people believe it does. As soon as they stop believing, it should drop.

we trade it with btc that would mean we believe it. finex suspends its withdrawal or exchanging it for usd is disable but we trade it because its convenient and can easily store the value like all the stablecoin.  if the research says it helps, they should explain how.  is it because we accumulate btc thru these stablecoin and every time price increments as we kept doing?

[Ucy]

See

https://www.bloomberg.com/news/articles/2019-10-03/bitcoin-gains-correlate-with-tether-issuance-researcher-says

It’s becoming a little clearer just how much the stablecoin Tether contributed to the rally that saw Bitcoin more than double in value this year.

On days that new Tether tokens are issued, Bitcoin increases in price as much as 70% of the time, researcher TokenAnalyst calculated. Since about $2 billion of Tether was issued this year, it was likely a significant factor.

Tether has been at the center of controversy since it was introduced as a way to provide liquidity in the more than $200 billion digital-asset market, where lingering concerns about illegal uses have made it difficult for many exchanges to secure banking services. New York’s attorney general in April accused the companies behind Tether of engaging in a cover-up to hide losses and co-mingling client and corporate funds.

Why and when Tether is issued is often a mystery, with officials of the private company saying the tokens are minted to meet orders from larger customers. In countries like China, where crypto exchanges are banned, people can pay cash over the counter to get Tethers with few questions asked. From there, they can trade Tethers for Bitcoin and other cryptocurrencies.

Tether can come into circulation on a number of digital ledgers, called blockchains, and the origin matters. Following issuance of Tethers on the Ethereum blockchain, as so-called ERC-20 tokens, the price of Bitcoin moves up 70% of the time, TokenAnalyst found. On Omni, which is linked to the Bitcoin digital ledger, the price of Bitcoin moves up 50% of the time, the researcher found.

“I think the discrepancies are appearing recently primarily because Tether on ERC-20 is just much easier than Tether on Omni to use as a means of transferring value quickly,” Sid Shekhar, co-founder of TokenAnalyst, said in an email. “Ethereum is a speedier chain than Bitcoin. As Tether is primarily used as a way to realize gains and get in and out of volatile crypto-asset positions in times of market movement, the speed of transferring into/out of it is critical.”

The data could make it easier to predict future price moves.

“Traders can leverage this knowledge by tracking mints and burns of the ERC-20 Tether token as it’s closely tied to movements in Bitcoin prices,” Shekhar said.

The thing is - there is a lot of real money being exchanged for bitcoin too, especially people cashing out everytime there is a spike, and people are obviously using real money to buy Tether in the first place, so it's not clear exactly what role Tether plays in bitcoin's spikes.

I honestly don't understand the correlation. If tether currently exists on another Blockchain, why does it still affect the price of Bitcoin? It should be affecting the price of ether instead.

Well, the company that handles tether should probably invite independent auditors to sort this out once and for all. The pressure is too much. I gurssy strong transparency will help bring back trust.

[beerlover]

That is the key, it is not backed by dollars, nobody can say if people were to cash out all tether today for dollars they would be capable of, everyone knows that tether used to be backed by dollars but now there is no dollars and it is a scam company that literally scammed people for over a billion dollars thanks to Bahamian bank account legal loopholes and now we don't know what to do. People should stop using tethers but they are not doing it, they still use it even tho it is known that the company behind it is a scam.

I don't know what we need to stop using it, should they go to jail and be confirmed criminals until we decide not to use it? What will be enough for people to say "tether is not real"? They literally print as many tether as they want and buy bitcoins and they basically spend zero for all of it.

[henmark]

Tether has a lot of conspiracy surrounding them, and it's not just empty words, some are facts, and it's hard to debate that.

I do believe that USDC or other coins would eventually replace USDT, especially if they keep being shady like this. Bitfinex suspending withdrawals won't help them either.

I am sure that no one will dispute what you are saying here because we even know of the court case they are presently in of over printing of money and I keep telling many people that tether is really a time bomb and will shock so many people the day that tether will pack up.

There are so many stable coins that have been so effective like this usdc, but I don’t know why people keep running to tether despite all these that has been aid about tether coin. Tether is not the most reliable stable coin to me, and I think that the company too is more concerned about the money they can use the platform to make and not like binance that if anything happen to clients account, they will refund them back. I believe more in usdc reliability than tether’s own.

[teosanru]

See

https://www.bloomberg.com/news/articles/2019-10-03/bitcoin-gains-correlate-with-tether-issuance-researcher-says

It’s becoming a little clearer just how much the stablecoin Tether contributed to the rally that saw Bitcoin more than double in value this year.

On days that new Tether tokens are issued, Bitcoin increases in price as much as 70% of the time, researcher TokenAnalyst calculated. Since about $2 billion of Tether was issued this year, it was likely a significant factor.

Tether has been at the center of controversy since it was introduced as a way to provide liquidity in the more than $200 billion digital-asset market, where lingering concerns about illegal uses have made it difficult for many exchanges to secure banking services. New York’s attorney general in April accused the companies behind Tether of engaging in a cover-up to hide losses and co-mingling client and corporate funds.

Why and when Tether is issued is often a mystery, with officials of the private company saying the tokens are minted to meet orders from larger customers. In countries like China, where crypto exchanges are banned, people can pay cash over the counter to get Tethers with few questions asked. From there, they can trade Tethers for Bitcoin and other cryptocurrencies.

Tether can come into circulation on a number of digital ledgers, called blockchains, and the origin matters. Following issuance of Tethers on the Ethereum blockchain, as so-called ERC-20 tokens, the price of Bitcoin moves up 70% of the time, TokenAnalyst found. On Omni, which is linked to the Bitcoin digital ledger, the price of Bitcoin moves up 50% of the time, the researcher found.

“I think the discrepancies are appearing recently primarily because Tether on ERC-20 is just much easier than Tether on Omni to use as a means of transferring value quickly,” Sid Shekhar, co-founder of TokenAnalyst, said in an email. “Ethereum is a speedier chain than Bitcoin. As Tether is primarily used as a way to realize gains and get in and out of volatile crypto-asset positions in times of market movement, the speed of transferring into/out of it is critical.”

The data could make it easier to predict future price moves.

“Traders can leverage this knowledge by tracking mints and burns of the ERC-20 Tether token as it’s closely tied to movements in Bitcoin prices,” Shekhar said.

The thing is - there is a lot of real money being exchanged for bitcoin too, especially people cashing out everytime there is a spike, and people are obviously using real money to buy Tether in the first place, so it's not clear exactly what role Tether plays in bitcoin's spikes.

I think the role tether is playing is the same that fiat is playing in our markets they just print it more and boom you see markets booming because the money supply has increased and so is the demand for more Cryptocurrencies. I have now really left alone the idea that tether is actually backed by any real us dollar it just is a crypto fiat which bitfinex prints whenever they want to.

[Willitivity]

For the fact that Bitcoin is bought with fiat, it's a simple logic. Once there is a high inflow or minting of fiat, it translates to the fact that there is a growing demand, those fiat are coming to buy Bitcoin. This pushes demand and price in turn responds.to this by going up a few percent.

[Hydrogen]

See

It’s becoming a little clearer just how much the stablecoin Tether contributed to the rally that saw Bitcoin more than double in value this year.

On days that new Tether tokens are issued, Bitcoin increases in price as much as 70% of the time, researcher TokenAnalyst calculated. Since about $2 billion of Tether was issued this year, it was likely a significant factor.

https://www.bloomberg.com/news/articles/2019-10-03/bitcoin-gains-correlate-with-tether-issuance-researcher-says

Mainstream media alleged market manipulation and criminal conduct against tether for the past 2+ years without citing a shred of evidence to support their claims. The only thing that can be said is consumers enjoy using tether as an intermediary option to purchasing crypto due to it retaining its 1:1 value with the US dollar. Tether is a popular choice for puchasing bitcoin, which explains a correlation between rising demand with both.

What they don't mention are the lengths that have been taken to ensure a future bitcoin run to $20,000 becomes less likely. The efforts they've made to eliminate cross exchange arbitrage. African and foreign exchanges becoming less accessible to the public. Regulation reducing the number of options americans have to trade on platforms like bitmex with leverage.

At the very least, a case could be made that cross platform arbitrage should be legal. Its essentially the same thing wall street traders do with HFT (high frequency trading) and dark pools. Options that are readily accessible for the super wealthy but under regulation made unobtainable to everyone else, simlar to ICOs being made available only to accredited investors and no longer accessible.

[dimonstration]

Tether has a fixed value so it isn't affected by how volatile the market of bitcoin is. By issuing new Tether, it signifes the increase in price of bitcoin to cater to the fact that the supply of coins that could buy bitcoin increased.
The existence of Tether is a great help since its like a bank but for crypto instead where its value would never depreciate and only you can have access to it and can use it whenever you want. It also shows you how the market changes, whether be it on increase or decrease, since having a fixed value comparison to changes to other coins can easily show how much the market changed.

It's like comparing something volatile into nothing. We can really see how the market behave if the two compares. I don't also think there's any correlation between them that makes bitcoin gained thru tether. It is simply like buying in fiat or those who are not ready yet for volatily buys using tether since they are now ready.

[AniviaBtc]

I don't know how these ""researchers" come up with such idiotic findings. From what I have seen, Tether is one of the factors behind the recent bearish trend affecting Bitcoin. Earlier, traders used to convert their useless alts to Bitcoin, to save their wealth. Now they are using USDT instead, as it is having a stable exchange rate. The trade volume involving Bitcoin has gone down, partly due to USDT/Altcoin trades now growing in popularity compared to BTC/Altcoin trades. This is what I have seen myself and this is what my 7 years of experience tell me. I don't need any researcher to teach me what is going out there.

That's right, they just conclude something that isn't happening. Tether is stable and doing good after i looked in to the issue. They don't know that bitcoin isn't that stable from time to time. The bitcoin is going down and observe how it can handle itself. Just think critically and be observant about it and you'll not need any help from any researcher.