Report: Unrest Over Tether Instability Causing Outflow into Bitcoin
As fear, uncertainty, and doubt (FUD) surrounding leading stablecoin cryptocurrency Tether mounts, capital has begun to flow out of Tether and into Bitcoin and other competiting stablecoins, according to a new report.
Diar: Trading Flows from Tether to Bitcoin Due to Continued FUD
Cryptocurrency market research firm Diar has, in their latest research report, put a spotlight on the ongoing issues surrounding Tether and the implications Tether FUD has had on the overall cryptocurrency market.
Tether has been embroiled in controversy for practically its entire existence. The cryptocurrency community continually calls into question if Tether is backed by corresponding U.S. dollar as claimed. The stablecoin has also been accused of being used as a tool to prop up the market and artificially inflate cryptocurrency prices toward new all-time highs. And despite third-party audits and repeatedly refuting any allegations that arise, the cryptocurrency market refuses to give concerns around Tether a rest.
Now, according to Diar’s report, the fear and uncertainty has begun to more strongly influence the market, causing Tether holders seeking safe haven during an ongoing 10-month-long bear market to liquidate their Tether into other cryptocurrencies, primarily Bitcoin and competing stabelcoins.
Diar’s data on trading volumes tied to Tether, Bitcoin, and Ethereum pairs, show a clear trend that interest in Tether is declining while outflow into Bitcoin and other cryptocurrencies continues to grow. Both Binance and OKEx – the number one and number two cryptocurrency exchanges by trading (adjusted) volume respectively – were reviewed as part of the study.
Clarifying Confusion over Tether-Fueled Price Premiums
The report also clarifies confusion surrounding the continued price premium Bitcoin enjoys depending on which exchange you look.
For example, popular margin-trading exchange Bitfinex currently shows a price of $6,581 for Bitcoin, meanwhile, Coinbase Pro, among the most popular U.S.-based exchanges, is trading at $6,423 – representing an over $150 discrepancy. After an initial exodus from Tether, the price premium reached over $1,000.
Diar says that the “risk premium” created by the Tether controversy is actually due to the value of Tether declining, causing Bitcoin to appear more valuable as a trading pair against Tether. Tether, which is supposed to remain stable at $1, is currently trading a couple cents short of a dollar, and fell to lows of $0.96 on October 15 as Tether holders fled the safety net the stablecoin once provided.
“The value of Bitcoin in actual Dollar terms hasn’t changed – it’s only changed against another cryptocurrency whose perceived value of $1 has dropped,” the report explains.
Competitor Stablecoin Options Are Taking Tether’s Market Share
Much to the relief of cryptocurrency investors who are still unconvinced the downtrend cryptocurrencies like Bitcoin are experiencing has come to an end, additional stablecoin options have surfaced from a number of competent cryptocurrency firms, including the Circle, Gemini, and Coinbase.
This morning, the Winklevoss-owned Gemini exchange sent an email to its customers celebrating the company’s Gemini Dollar stablecoin had been listed on 25 different exchanges. Earlier this month, crypto startup Paxos announced that the Paxos Standard, yet another stablecoin, had been included on over 20 different “top crypto exchanges and OTC desks.” And yesterday, Coinbase joined Circle to become founding members of the CENTRE consortium responsible for the dollar-pegged USD Coin – which Coinbase will soon be listing.
As Tether FUD continues to thrive, the larger the opportunity becomes for competitor stablecoins to snatch up invaluable market share from the current king of stablecoins, and for cryptocurrencies like Bitcoin to finally make a longer-term price recovery.
Featured image from Shutterstock.
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by Tony Spilotro on October 25, 2018 at 02:30AM