The cryptocurrency market cap, despite dropping from a high of about $800 billion to $215 billion is harder to artificially prop up now, as according to a recent report the issuance of $500 million Tethers, often believe to be used to pump BTC, didn’t affect the market.
During the last bull market, there were concerns from within and outside the crypto community regarding cases of alleged upward price manipulation centered around the popular stable coin known as Tether’s USDT.
While some industry experts felt the alleged price manipulation gave the entire cryptocurrency space a bad look, others expressed worry about the absence of proof that all Tether tokens in existence were fully backed by real dollars sitting in bank accounts, and feared that the entire crypto economy could come crashing down if something went wrong with Tether.
Bitcoin Unaffected By Tether
However, there no longer appears to be a link between the issuance of new Tether tokens and spikes in the price of bitcoin and other cryptocurrencies. As reported by Bloomberg News, the current month has seen the creation of $500 million worth of USDT without any corresponding upward movement in bitcoin’s price. The cryptocurrency is currently trading at $6,725, only 5.2% more than its August 1 price of $6,377.
In a study called “Is Bitcoin Really Un-Tethered”, John Griffins and Amin Shams of the University of Texas, claimed that during the bull market of 2017, Tether was used to buy up bitcoins on the popular Bitfinex exchange and other platforms whenever prices went down. Based on their analysis, Griffins and Shams concluded that tether was being used to prop up the price of bitcoin and other cryptocurrencies.
Another research from Chainalysis showed an 85% correlation between the creation of new USD and the price rallies of bitcoin, ether and litecoin. According to the same research paper, the current bear market brought an end to this correlation. There, however, remained a strong correlation between the issuance of USDT and the price movements of EOS and NEO in the first half of 2018.