Issuance of $500 million USDT Didn’t Influence Bitcoin’s Price: Report

Elikem Kofi Attah
  • A recent report suggests the issuance of $500 million worth of Tether's USDT tokens failed to affect the cryptocurrency market.
  • USDT tokens are often believed to be used to artifically pump BTC's price

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.

Top Crypto Trends for 2019

Cryptocurrencies are a new form of asset that are designed to work as a medium of exchange like any other currency. Bitcoin, the flagship cryptocurrency, paved the way in 2009, and now there are more than 2,000 cryptocurrencies available according to CryptoCompare. Although it’s been a decade since Bitcoin’s launch, cryptocurrency has yet to achieve mass adoption as it faces many challenges from within and without. Still, many financial analysts are confident that prices will soar as institutional investment flows in 2019 and beyond.

Cryptoassets hit an incredible peak in December 2017 when the Bitcoin price reached $20,000. 2018 however, saw prices collapse across the board as the enthusiasm of 2017 waned with failed ICOs and inactive projects.

One possible factor that contributed to the slump is that US regulators are yet to approve an ETF (Exchange Traded Fund) application. Another project that is highly anticipated to move markets is the new Bakkt Exchange, from NYSE parent company ICE (Intercontinental Exchange) which will likely herald a new era of institutional investment.

There is however a lot of positive development within the cryptoverse itself. In 2019, some new trends are emerging which observers should monitor closely, as they have the potential to foster enormous growth. Let’s take a look at some of these new positive trends.

Leaner Companies

We have seen many failed cryptocurrency projects in the last 2 years, and one reason for their failure was lack of funding. Crypto giants like Bitmain Technologies, ShapeShift, and many blockchain-based social media platforms like Steemitwere forced to reduce their staff because of the lack of investment in this sector.

These companies are the victims of the prolonged bear market, and they were forced to shelve their expansion plans because of poor financial planning and many other mismanagement issues. The new trend therefore, is for crypto startups is to cut their operational costs to survive in the crypto ecosystem. These new, leaner companies may indicate a more resilient industry in the long-term.

Scalability

Another primary issue is scalability, and it seems to still be a problem in 2019. Ethereum for example, had to postpone its Constantinople upgrade due to a serious, smart contract vulnerability threat. The update was scheduled to launch at the start of this year but was delayed  after an independent research firm detected the flaw.

There are many new projects surfacing that claim to work on improved algorithms or protocols. These algorithms and protocols are not fully developed, but promise a hybrid of proof of stake and work. Developers on projects around the world are working hard on the problems of scalability, and if progress is made, 2019 may set the stage for broader crypto adoption.

More User-Friendly Apps

The Lightning Network is seeing a great deal of activity in 2019 in its role as a second layer payment feature. Still, developers are trying to further improve the LN protocol to make it more secure, faster and cheaper to conduct crypto transactions. As work continues, the Lightning Network is turning Bitcoin into a faster and cost-effective medium of exchange. You can expect more development in LN protocol in 2019 as developers are creating more apps that are both intuitive and user-friendly. You can find the best trading software reviews here to learn more about these apps.

Security Tokens Vs ICOs

After regulatory authorities began targeting Initial Coin Offerings (ICO), Security Tokens - which explicitly acknowledge their regulatory obligations - are being launched throughout the globe.

The new name also seeks to avoid much of the negative stigma of the ICO, which has become associated with failed projects and even outright scams. Jurisdictions such as Malta, Switzerland and Singapore are more accommodating towards Security Token sales, adding to investor confidence in this newer token model.

Education

Another obstacle for the crypto ecosystem is lack of educational resources. More efforts have been made recently to make crypto education more accessible. New York University for example has taken the initiative by introducing a graduate level certification in digital currencies. Now that prestigious institutions such as NYU and the London School of Economics begin to spread the word about cryptoassets, the industry is further cementing itself in the public consciousness.

The Availability of Bitcoin ATMs

2019 may see the introduction of Bitcoin ATMs in several major cities in the United States.

With 30 new machines installed in Chicago, and over 100 in Philadelphia, prospects are looking good. These new ATMs are solely for Bitcoin transactions, but some regular ATMs in New York are now also offering crypto services. These new services require an account with  Bitcoin payment provider LibertyX, and users can purchase up to $3,000 worth of Bitcoin daily using a debit card.

Conclusion

Cryptocurrency looks set once again in 2019 to gain traction. While the industry is young, and in many ways still recovering from the spectacular boom and bust of 2017 and 2018, it still inspires a great deal of enthusiasm and interest globally. These trends in 2019 will be closely watched.