Is Tether behind Bitcoin’s latest price spike?
The new yearly high for the Bitcoin price came in the wake of news that Tether’s market cap had reached an all time high of $3,320,057,493.
More than $100 million of new USDT has been printed in the past 70 days.
Two days ago Whale Alert also highlighted an unusual series of five transactions totaling $50 million USDT from Bitfinex to Tether Treasury and vice versa. Its significance is being debated.
The sudden spike (to $8846 at the time of publishing) has led to expectations that the Bitcoin price will shortly break the significant $10,000 psychological barrier – a level BTC has not seen since March last year.
Wall Street veteran Max Keiser believes Bitcoin is “coiling up” in order to hit a five-figure price – and from there it could reach a new all time high of $28,000.
But another veteran analyst and Bitcoin bull Peter Brandt cautioned it was: “Most likely a brief surge followed by a significant correction.”
Social media mentions and sentiment appear to be on side for a further move upwards.
Data from TheTie.io shows that over the past month Bitcoin tweet volume is double the average, which SMU research shows is positively correlated with price.
Daily sentiment also topped 89% although this fell back to 63 percent in recent hours.
Bitcoin is also now profitable on a yearly scale – investors who bought in this time last year will finally see a profit.
Bitcoin has become one of the year’s most profitable investments, up around 130% for 2019 so far. That’s more than ten times better than the stock market.
There are plenty of competing explanations for the Bitcoin price’s recent upward trajectory, from excitement sparked by Consensus, to investors fleeing to safety from the US China trade war.
There’s also no doubt that more and more institutions are getting on board, with Fidelity due to open a Bitcoin OTC trading desk soon and Bakkt about to introduce futures.
Last week Mark Yusko, the Managing Director of Morgan Creek Capital Management described BTC as a great investment portfolio diversifier.
The spike comes after legal pressure against Tether and Bitfinex lessened in recent days.
The New York Attorney General’s office was pursuing the companies over an alleged $850 million “fraud” however the court case is looking increasingly in favour of the defendants.
Having agreed the charges brought by the AG were overly wide, presiding judge Joel M Cohen has scheduled a hearing to dismiss the case entirely on July 29.
Tether – which claims to have raised $1 billion recently – said in a statement:
“This order is another victory in the ongoing defense of our businesses against the New York Attorney General’s overreach, and it comes on the heels of Justice Cohen’s ruling last week granting our motion to significantly narrow the injunction against our businesses obtained by the Attorney General.”
The court case revealed that Tether has not been backed 1:1 with US dollar reserves.
In fact, only about 74% of outstanding Tether tokens were backed with cash in its reserves.
And The Block reported this week, that Bitfinex’s attorney David Miller had told the court some of Tether’s reserves were invested in Bitcoin.
“Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin.”
Whale Alert highlights unusual Tether transactions
On May 23 and 24 Whale Alert highlighted a series of five transactions totaling $50 million worth of USDT from Bitfinex to Tether Treasury and vice versa.
One transaction from Tether to Bitfinex amounting to $20 million did not come back.
AMB reported that some suspect this is a trick being played by both parties in a bid to pump the market.
Tether’s impact on the Bitcoin market has been hotly debated for years.
Research from the University of Texas released last year claimed that half of the Bitcoin price rise in December 2017 was due to Tether and suggested that transaction patterns show Tether was “used to provide price support and manipulate cryptocurrency prices.”