As Bitcoin Slides, Tether trading Inches Up in Influence
The crypto market is having a reverse evolution, as enthusiasm for injecting fresh cash gives way to crypto-only pairings.
As Bitcoin slid overnight below $8,000, a new trend was seen, Tether trading taking up even more. For months now, Tether trading has been ahead of the volumes for Ethereum, and in the latest sell-off, USDT pairings took up more than 14% of total market volume.
What is curious is that the latest market crash seems to have revived volumes, as the relatively low Bitcoin prices may be causing sellers to panic, but buyers are also appearing. The curious phenomenon is that while trading against the Yen and the USD have also spiked, Tether trading is on the increase as well. More than the equivalent of 313,000 BTC were traded against USDT in the past 24 hours.
The recent sell-off also indicates that March is not the start of another altcoin season. Most coins are dropping sharply in terms of Bitcoin prices, and funds are flowing back into Bitcoin, increasing its dominance.
Even with a BTC price of $7,884.36, the leading coin dominates more than 42.2% of the total market capitalization. And losses for altcoin have been much sharper.
The Tether minting wallet has not produced new coins since January. After a round of burn tokens, four more transactions appeared, this time for an unannounced amount of "freeze tokens". An estimated 5 million tokens were frozen, in what the community sees as a non-transparent transaction.
In the middle of March, Tethers are still making their way into Binance, which is at the top of the USDT rich list. Previously, most USDT was concentrated on Bittrex, but the crypto-only exchange is seeing transactions moving tens of thousands of USDT in the past days. It is possible that the crypto-only exchange is seen as safe haven in the face of potential US SEC regulations on exchanges.
With 2.1 circulating USDT right now, it is still possible that the asset would affect the price of Bitcoin. This is especially true as the tokens move into one of the most active exchanges, Binance, which sets many trends for altcoins, if not Bitcoin.
The Tether company has not revealed the rationale between freezing the tokens. Some suspect a hack. Strangely, the freeze addresses where the transactions terminated could not be explored and returned an error message, making the move even harder to explain.
But the fact remains that the end of Tether printing coincided with the start of a long and dramatic slide in Bitcoin prices shows that the tokens and some non-transparent trading mechanisms served to push the price of Bitcoin in disproportion.