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.

Ripple CEO: 'You Don’t Want to Use BTC at Starbucks'

On Thursday (January 23), Brad Garlinghouse, the CEO of Ripple, told the Wallet Street Journal (WSJ) that Bitcoin is not a good means of payment because BTC transactions take too long.

The Ripple CEO's comments were made during his talk with Phillipa Leighton-Jones (Editorial Director for Innovation) at a Ripple-sponsored event (organized by the WSJ) called "Ripple Panel: Changing the Finance Industry From Within" held alongside this year's World Economic Forum Meeting in Davos, Switzerland.

Although we don't yet have a full transcript of this interview, we do know about two of the things he talked about thanks to tweets by Asheesh Birla, SVP of Product at Ripple, who was at this event.

First, it seems that although the Ripple CEO likes Bitcoin as a store of value, he does not see (at least, as of now) as a viable means of payment. The example he gave was paying for a cup of coffee at Starbucks. He believes that BTC transactions take so long to confirm that by the time you have finished paying for your coffee, "it'll be cold." 

Second, within the next 12 months, he sees several companies in the crypto space holding initial public offerings (IPOs) and he wants Ripple to be "on the leading side" since this is "a natural evolution" for Ripple, which raised $200 million via a Series C funding round (which valued the company at $10 billion) last month. 

On Wednesday (January 22), Ripple published the "Q4 2019 XRP Markets Report", which is a quarterly report that allows Ripple to "voluntarily provide transparency and regular updates on the company’s views on the state of the XRP market, including quarterly programmatic and institutional sales updates, relevant XRP-related announcements such as Xpring and RippleNet partnerships and commentary on previous quarter market developments." 

In Q4 2019, Ripple's total XRP sales were down just over 80% compared to the preceding quarter ($13.08 million vs. $66.24 million). Ripple "continued the pause of programmatic sales" (to crypto exchanges), and focused exclusively on over-the-counter (OTC) sales to "a few strategic partners, who are building XRP utility and liquidity in strategic regions including EMEA and Asia."

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