Take a look at the top traded cryptocurrencies by volume over the last twenty-four hours and you’ll see the top three as follows: First – Bitcoin (BTC), Second – Ethereum (ETH), Third – Tether (USDT).
That’s right, USDT did more than $2.06 billion in volume since this time yesterday, or the equivalent of just shy of 185,000 BTC.
The coin is currently ranked number 23 by market cap over at CoinMarketCap, with a total capitalization of $2.25 billion – up more than 400% since the start of November last year.
So what’s caused the sudden influx of attention and, in turn, volume?
Concerns are spreading that Tether isn’t backed up as the company behind it suggests it is and, in turn, fear, uncertainty and doubt (FUD) reports are hitting press, with some highlighting the potential for a market crash of up to 80% in the value of bitcoin. Any 80% crash would no doubt translate to a considerable amount of collateral damage in the wider cryptocurrency space meaning that this potential event is far from limited in its impact to those holding bitcoin.
The thing is, there’s a lot of talk, but most of it is exaggeration and some of it is outright nonsense.
First up, for anyone new to Tether, it was set up as a pin to the USD that allows exchanges that don’t want to have to deal with the regulatory nightmare that is dollar-pair trading but that wants to offer its users the opportunity to trade crypto versus the dollar.
In short, the exchanges in question (and we’re talking some big names here – Bittrex, Poloniex, etc.) offer USDT/BTC, USDT/ETH etc. instead of USD/BTC and USD/ETH.
It’s a neat solution but it rests on one important assumption – that the amount of Tether that’s in circulation is equal to the number of US dollars that the company behind the token, Tether, has in its reserves. Tether can’t (or shouldn’t, at least) issue USDT without having USD to an equal amount to back up the issue.
This week, the company announced that it has severed its relationship with an entity called Friedman LLP, which is the company’s (or at least was the company’s) audit firm and, in turn, was the firm tasked with ensuring that Tether has the USD in its bank account to back up the USDT that it’s issued.
This severing of relationships has sparked a return to speculation that Tether’s USD holdings fall short of the number of USDT issued, which has led to reports like this and this hitting press. The fear is that if Tether is revealed to not be able to back up its USDT issue count, the price of BTC would be seen as artificially inflated and/or the exchanges that use Tether would be steeply exposed to an asset (USDT) that is, in reality, worth a fraction of its current pricing.
So why is this not a big deal?
Well, first of all, because there’s no indication that Tether doesn’t have its USD holdings in place. In September last year, the audit company that just severed ties with Tether reported here that the company had just shy of $443 million on its balance sheet.
Second, because even if there was some discrepancy, the impact would likely be far less than 80% dip in the price of BTC. Indeed, when you look beyond the headlines, even the major FUD articles suggest an impact ranging between 30%-80% and when you consider how much volume is tied to USDT, it’s likely to be far less than that – in and around 15% if USDT collapses altogether.
So what’s the opportunity here?
This is a buy the dip trade. As these reports compound uncertainty, we could see numerous dips in the market cap of certain coins, especially BTC. Each of these dips represents a chance to buy cheap coins.
And if things do unravel, the 15% correction is an even bigger chance to do the same.
We will be updating our subscribers as soon as we know more. For the latest on USDT, sign up below!
Disclaimer: This article should not be taken as, and is not intended to provide, investment advice. Global Coin Report and/or its affiliates, employees, writers, and subcontractors are cryptocurrency investors and from time to time may or may not have holdings in some of the coins or tokens they cover. Please conduct your own thorough research before investing in any cryptocurrency.
Image courtesy of Tether.
Blockchain technology outshines Bitcoin and Gold during global pandemic
As the popularity of cryptocurrencies such as Bitcoin begins to level up with investments made in metals such as Gold, together they have both made significant advantages for investors who have taken a leap to invest in them.
However, thanks to the pandemic and the dynamic shift in investing and the economy, many investors have seen fluctuating losses and gains thanks to the uncertainty of the current business world.
Many investors that backed companies who have exposure to blockchain technology have seen an approximate amount of 54% return on investments over the past year. This is even after considering how hard the global tech market and companies have been hit since the beginning of the pandemic.
What is blockchain technology?
Blockchain technology was first introduced as a supportive technology for Bitcoin. A blockchain is a simple, unchangeable and un-hackable digital ledger that holds transactions in little blocks attached to a chain. The transaction is duplicated and distributed across the entire network of systems on the blockchain, making it available for everyone on the network to see.
Each block in the chain contains various transactions which are recorded on the participant ledger every time a transaction takes place. The database is decentralised and is managed by multiple participants known as Distributed Ledger Technology (DLT).
Although blockchain technology was birthed from Bitcoin and was widely adopted for the use of cryptocurrencies, the way it works and its security has made…
Bitcoin Surges After Tesla Bought $1.5 Billion Worth of BTC
The sudden rise of Bitcoin has been connected to the decision taken by the Tesla electric car company to buy $1.5 billion worth of Bitcoin.
The company explained in a filing with the Securities and Exchange Commission (SEC) that it bought Bitcoin to diversify its cash returns and more flexibility.
Musk’s Tweets also impacted Dogecoin’s price
Tesla also added that it will start accepting Bitcoin payments for all its products, although this will be based on a limited basis and applicable laws. If the company concludes and starts accepting cryptocurrency, it will make it the first major car manufacturer to accept Bitcoin payments. The company’s founder and Chief Executive Officer Elon Musk has developed an interest in Bitcoin and cryptocurrencies.
He has been tweeting severally about the viability of the Dogecoin (DOGE), which doesn’t have an important market value attached to it.
ur welcome pic.twitter.com/e2KF57KLxb
— Elon Musk (@elonmusk) February 4, 2021
Few hours after endorsing Dogecoin, the cryptocurrency rose by an impressive 50%. But regulatory authorities are still concerned about the risks in cryptocurrency investments, with several regulatory bodies warning traders and investors they could lose all their money from crypto investments.
But for Tesla, the company decides to diversify its funds and increased its cash returns. However, Tesla also warned investors about the volatility of Bitcoin’s price in its SEC filing. According to the SEC…
XNO Token of Xeno NFT Hub listed on Bithumb Korea Exchange
Hong Kong, Hong Kong, 25th January, 2021, // ChainWire //
Xeno Holdings Limited (xno.live ), a blockchain solutions company based in Hong Kong, has announced the listing of its ecosystem utility token XNO on the ‘Bithumb Korea’ cryptocurrency exchange on January 21st 2021.
Xeno NFT Hub (market.xno.live ), developed by Xeno Holdings, enables easy minting of digital items into NFTs while also providing a marketplace where anyone can securely trade NFTs.
The Xeno NFT Hub project team includes former members of the technology project Yosemite X based in San Francisco and professionals such as Gabby Dizon who is a games industry expert and NFT space influencer based in Southeast Asia.
NFT(Non-Fungible Token) technology has recently gained huge focus in the blockchain arena and beyond, making waves in the online gaming sector, the art world, and the digital copyrights industry in recent years. The strongest feature of NFTs is that “NFTs are unique digital assets that cannot be replaced or forged”. Unlike fungible tokens such as Bitcoin or Ether, NFTs are not interchangeable for other tokens of the same type but instead each NFT has a unique value and specific information that cannot be replaced. This fact makes NFTs the perfect solution to record and prove ownership of digital and real-world items like works of art, game items, limited-edition collectibles, and more.
NFTs are already being actively traded in markets globally. For…