Tether (USDT) – a stablecoin that is allegedly pegged to the US dollar on a 1:1 ratio – has issued $311 million worth of additional tokens, according to data from OmniExplorer. Tether has come under fire from critics many times, with controversy surrounding the stablecoin’s legitimacy. A lack of official public audit to confirm its claims to be backed by fiat has left a murky cloud hanging over its performance.
A Journey Embroiled in Controversy
There have been a substantial number of allegations suggesting that during the December 2017 price rally of Bitcoin, Tether was manipulating the price. A study by the researchers at the University of Texas claimed that BTC price spike was impacted by a “conscious strategy to provide price support” using Tether tokens.
Price manipulation isn’t the only controversy surrounding Tether. Back in October of 2017, it was revealed that Tether had a similar ownership to Bitfinex, a leading crypto exchange. In a runup to an external audit to verify that Tether does in fact have USD reserves equal to the number of USDT in circulation, the auditing firm was fired.However, since then a US-based law firm – Freeh Sporkin and Sullivan LLP – has been hired to check the bank accounts of the company. They confirmed that Tether does have a reserve of USD exceeding the value of USDT in circulation.
Is Tether a Precursor to a Bitcoin Price Jump?
The last time there was an influx of USDT – May 18th – the price of Bitcoin climbed from $8100 to $8500 in the days following. Despite the fact that this price increase didn’t last long, it didn’t stop people within the crypto world from linking the two events. That being said, following this fresh influx of USDT, the price of Bitcoin has rallied by just over $150. This influx of new USDT has pushed the cryptocurrency to become the ninth largest in terms of market capitalization, according to data from CoinMarketCap.
Not everyone agrees upon this theory. Charlie Lee (Litecoin Founder) commented on the fresh issue of USDT:
Generally, this has been a precursor of price going up. Tether gets printed when people deposit USD and get USDT back. This USDT will then be used to buy crypto. This is similar to someone depositing $250MM to exchanges. Of course, that doesn’t mean they will buy right away. DYOR https://t.co/zg2PEjGohv
— Charlie Lee [LTC⚡] (@SatoshiLite) 25 June 2018
Competitors on the Horizon
Jeremy Allaire (Circle CEO) announced last week that through a strategic partnership with Bitfinex, they aim to create a new price stable tokenized US dollar coins (USDCs). This new competition within the stablecoin market could be the shakeup Tether needs to help establish itself as a trusted stablecoin and silence its critics.