More than 46% of Bitcoin (BTC) trading this Thursday is happening against Tether (USDT). The spike in USDT liquidity follows another move by Tether to send out tokens from its treasury wallet into Bitfinex.
While there has been no new printing of USDT tokens, the stored funds allow for a fast move. On Wednesday, the Tether treasury wallet sent two transactions, of 50 and 30 million USDT. The funds were moved directly into one of the Bitfinex hot wallets.
For a few hours on Wednesday, both BTC and altcoins recovered sharply. BTC returned above $6,500, and some altcoins grew by 20%, and as much as 90% for smaller assets.
The coincidence of USDT tranches and a quick recovery of BTC prices by a few hundred dollars confirmed some of the suspicions of market manipulation.
And while the Tether company has revealed it may have the funds to match USDT printings until now, some suspect the funds did not come by institutional investors buying USDT:
If you can find a single institutional buyer who will go on record saying they've wired USD to Tether in exchange for USDT they then used to purchase BTC, I'll be impressed. Every institutional crypto trader I've talked to uses OTC desks or brokerage services like Coinbase Prime.— Jackson Palmer (@ummjackson) August 15, 2018
In theory, the minting of USDT is done in batches and should reflect previous investments. However, there is a noticeable trend for new issues of USDT to happen just during periods of BTC weakness. Now, the technique has been replaced by printing significant USDT tranches, storing them in a treasury wallet, and releasing them when BTC prices need support.
After a short correction, BTC prices slid again, to $6,324.14 on Thursday (8:30 UTC), down 0.2% overnight, virtually stagnant. According to data from Cryptocompare, Bitfinex remains the most active exchange for BTC trading, based on BTC/USD positions. This is the reason for the influence of USDT, which spills over to other exchanges. The price on Bitfinex is a bit lower, at $6,306.40.
Japanese Yen trading is almost gone compared to previous levels, down to 13.5% of volumes, as USDT becomes the dominant price factor. At the same time, there are indications of outflows of USDT from some altcoins, which were previously supported. Instead, altcoins are exchanged for BTC, or have already been sold for USDT.
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