Crypto stablecoin Tether announced earlier today (Monday June 25) that they have just issued $250 million in new tokens. When a similar thing happened in March, BTC enjoyed a price hike, so this announcement could mean a much-needed boost for beleaguered Bitcoin.
Remember the day: Monday, June 25. It could be the day that officially marks the start of Bitcoin’s latest – and hopefully most significant – comeback of 2018. Crypto startup and stablecoin Tether announced the release into the open market of $250 million in new tokens on Monday, and based on what happened last time Tether made such a move, speculation is rife that a Bitcoin price rally is imminent.
What Is A Stablecoin?
A stablecoin is named so because it is just that, a “stable coin”, i.e., one whose value cannot fluctuate. Tether’s coin abbreviation is USDT – US Dollar Tether – based on the fact that a Tether coin will always be worth exactly one US dollar. Because of this, many cryptocurrency exchanges will happily take USDT as a proxy for traditional dollars.
This works especially well for trading platforms who are unable to hold fiat currency for customers, because they have been unable to forge the necessary banking connections.
How “Legit” Is Tether?
To quell any negative speculation on Tether’s solvency as a company, prior to Monday’s coin release, legal firm Freeh, Sporkin & Sullivan LLP (FSS) released a report indicating that USDT was fully-backed by physical dollars stored in Tether bank accounts, and that Tether has some $3 billion in assets.
Tether has a market cap value of more than $2.7 billion, making it the11th ranked cryptocurrency in the world in terms of value.
How Will This Release Of Tether Affect The Market?
According to the company that created and runs Tether, because Tether tokens must always be backed up with the identical amount of traditional physical dollars, new USDT tokens can only be created when individuals, companies or organizations deposit more physical dollars into Tether’s reserve accounts. Therefore, the fact that Tether are issuing large numbers of new tokens is a clear indication that new money has been poured into Tether’s coffers.
In the past 24 hours the interest generated by Tether and its new tokens has resulted in $4.2 billion in trading volume. This pickup in trade will affect the value of Bitcoin, the immediate chasing pack of Ethereum, Ripple, Bitcoin Cash, EOS and Litecoin, plus the wider cryptocurrency market for days, possibly weeks to come.
What Happened Last Time New Tether Was Issued?
In March of this year Tether released 300 million tokens, but while the crypto market had declined since January, it was still comparatively strong, so the impact of the USDT release was not noticeably dramatic.
On May 18 Tether released $250 million new USDT tokens. Initially, Bitcoin’s price rose steadily for several days, climbing from $8,100 on May 18 to $8,500 on May 21. However, while Bitcoin’s price had risen by $400 in three days, in subsequent weeks it has slumped alarmingly, dipping below $6,000 on June 23.
Monday’s release of 250 million new Tether tokens is the first major release since May. Whether this time around, the boost it gives the crypto market is longer lasting remains to be seen.