Will Tether Always Be $1?
Uncertainty around the cryptocurrency is mounting, and it seems like we are arriving at an answer. In late December the CFTC sent subpoenas to both Tether and Bitfinex. Since the subpoena, Tether really hasn't put everyone at ease. They have minted 775 million USDT. That is a 52.5% increase in the total supply from December 6th, 2017. As such, approximately 34.5% of all USDT created were produced after Tether had received the subpoena from the CFTC. (January 2018). This subpoena is probably going to decide Tether’s future as a stablecoin one way or the other. Are they rapidly printing money before the cage comes down? Maybe, but if that is what happened than Jan Ludovicus van der Velde, Philip Potter and Giancarlo Devasini are probably all going to prison. They can't be that stupid? Can they?
Here is an alternative theory for you. What happens if Tether is audited, and it becomes known that they didn’t have all that money, but Tether.io continues to honour the 1:1 withdrawal and deposits, could maintain its value? It would be no different to an exchange’s digital wallet or another 3rd party payment solution like PayPal. The extra value that USDT brings to Bitfinex is more than enough of an incentive to run the network and continue to honour all the tokens.
“After over a month of absence Tether has returned to the USDT printing business, issuing $300 million worth in just one massive batch. The proximity of the move to the recent reversal of the downtrend in the market has lead to renewed calls by critics that Tether is manipulating prices."(21st of March)
There is a loud voice on Reddit that insists Tether are manipulating Bitcoin prices. Their rally riles from a single manifesto ' The Tether Report
'. It claims to have quantified the Effect of Tether. Equally as championed, is The Tether Report's complete contradiction. The Ivanov's analysis, by Oleksandr Ivanov, a data scientist from the University of Groningen, concluded that bitcoin’s daily price percentage change and the amount of tethers daily percentage change is -0.17168 (p-value is 0.001, which is statistically significant). So there is a negative correlation between the change of the amount of tethers and the change of bitcoin price. Very little indication of market manipulation.
Should I Hold Tether?
For the size of Tether and Bitfinex, it would take a Big 4 accounting firm to properly audit them. In the meantime, hold Tether and use it as a stable token. I wouldn't keep money as Tether, but why would anyone?
Tether lets traders react in an instant. Now that it is also on Bittrex it is a really useful currency that works across exchanges like Kraken, Binanace (selectively), HKSY, EXMO and Bitfinex. If you want to move coins around and recieve exactly what you sent, Tether is a good way to do that. Tether can be used to shed profits and weather the bears. Just make sure the risk is properly understood.
For more information on buying Tether read Coinlist's complete guide to Tether
. It will run through important investor information and detail exactly how Tether can fit into your portfolio.