Are Tethers Again Backing the Bitcoin Re-Bounce?

Since January 14, a total of 450 million USDT has entered circulation with new issues.

The latest issue of USDT tokens happened only hours ago, as Bitcoin bounced above $11,000 once again. The cryptocurrency market was all in the green, with powerful re-bounces of all assets. BTC went up more than 11% to $11,745.60, just as more Tethers were being sent out immediately.

Tethers are not only affecting the price of Bitcoin, but making their way into Binance, as an additional boost to liquidity. Tethers serve as a source of credit financing for Bitcoin, and thus cause a disproportionate rise in prices.

Bitcoin Will Fall, Say Experts at Capital Economics

There has also been indication that users may be buying Tethers for cash through Kraken, possibly as a means of participating on exchanges. While there are other crypto coins, for now USDT is still relatively easy to move, making it possible to pick and choose exchanges.

Tethers may be affecting even more assets, as now there is a NEO/USDT trading pair on Binance, one of the hottest, most sought-after exchanges, which hosts some of the most rapidly appreciating assets of the past months.

Tethers seem to become even more popular with Asian exchanges like OKEx, Huobi, and Binance. But the chief market for margin trading using Tethers remains Bitfinex.

After a few days of actively adding USDT to the market, the trading pair is the third most active in the world. There are now 1.65 billion USDT in circulation, with record trading volumes above $4.9 billion, and record volumes of more than 423,000 BTC. The circulating supply of USDT is the most actively traded token, going though all coins outstanding more than twice in 24 hours.

While the action of USDT props up the Bitcoin price, these tokens also may act as a form of toxic credit, making the crash harder if trust in the system is lost. The addition of new Tethers at an accelerating, unprecedented pace came alongside the crash of BitConnect, as well as the entire market sliding more than 30% in a single day.