The problem with $ 20,000 Bitcoin

Bitcoin hit an all-time high today at $ 20,000 and “hodlers” rejoiced. However, this year’s rally leaves constant questions about Tether’s issuance, the stablecoin (USDT) which apparently has unlimited capacity to print money. The flow of Tether into Bitcoin is generally correlated with rising prices, especially over the past year – every time Bitcoin appears to be falling, a load of new Tethers is created (often over $ 50 million at a time. ) and buy BTC, taking the price of BTC back up. You can see Tether’s creation posted in real time on twitter here and via CoinMarketCap:

This staggering increase of over $ 4 billion in new Tethers implies that someone has paid Tether $ 4 billion to buy Bitcoin in the past three months alone. Tether has a little checkered pattern with its policy of not posting any type of audit or showing proof of funds. It’s unclear whether or not they receive $ 4 billion in cash, but it raises questions, especially when Tether is created on weekends and other times when other markets don’t normally trade.

You can see the Bitcoin market cap accordingly over this period:

Some academics also researched this and find a correlation between the issuance of Tether and the price and corresponding market cap of Bitcoin.

So if you are a Bitcoin believer, just follow the Tether printer and watch the print. But if they stop printing, beware of the downsides if there isn’t that regular USDT injection. We may see more of them on January 21 when the New York Attorney General Deadline to get information from them.

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