When the bullish bitcoin run began, people attributed it to Facebook’s announcement of launching Libra, but that might not be the only factor after all. It is with no doubt that the price of bitcoin took an upward trajectory after the announcement, but there’s another digital coin fueling the rise.
Nouriel Roubini, a popular bitcoin basher and a New York University economist, broke his long-time silence by claiming that some exchanges were behind bitcoin’s recent price surge. In his tweet quoting BitMEX, Nouriel stated that it was not possible to believe the figures released by BitMEX because of ‘fake coins, pricing, and even transactions’. This was after BitMEX announced that their bitcoin trading volume had hit $1 billion
Tether, which is a stable coin, is said to be the cause of bitcoin’s price increase over the past weeks. Bitcoin’s price has doubled from around $7000 to $12000 at the beginning of this week. At the time of writing this, bitcoin’s price stands at $11,853.84, which is a 1.17% increase from yesterday’s value.
Market analysts have established that changes in Tether’s market cap have a direct impact on the value of Bitcoin. Since May, there has been an addition of more than $500,000,000 USDT into the market, which also saw bitcoin’s price increase from $6000 to where it is trading at currently (an average of $11,000 for the past two weeks).
The effect of Tether on major cryptocurrencies cannot be overlooked. It is one of the leading stable coins with a market cap of $3.57 billion and ranks at position nine according to Coinmarketcap. This makes it the first option for investors whenever there is negative growth in the price of cryptocurrencies. With its value staying stable, investors can avert possible losses that may arise if they hold the volatile assets.
Bitcoin trading may at times be incomprehensible and highly volatile, but what’s for sure is that the coin’s price has some extrinsic factors pushing it. Libra was put on the spotlight recently, but a little more scrutiny would prove how Tether has affected the prices.
In 2018, a study conducted by John Griffins and Amin Shams showed that new tether notes were being printed illegally to manipulate the price of bitcoin. It also showed that investors were using the stable coins to buy off BTC, which saw its value raise to about $20,000 in 2017, the highest bitcoin run ever to be experienced.
Is the same thing happening in 2019? We will have to wait and hear from relevant financial watchdogs!