Bitfinex Gets Another Tether (USDT) Clean-Out

As funds continued to flow into the exchange, the Tether treasury intervened again to lower the liquidity.

The Tether treasury continues to offload Tether (USDT) from Bitfinex, in effect clearing its balance book of liabilities. Another 100 million USDT left the market, boosting the Tether storage to more than 666 million USDT. After the latest move, the Bitfinex wallet was left with only around 3 million USDT.

Paradoxically, even with one-third of the supply removed from the market, the general lack of liquidity still means that more than 19% of all trades are made against USDT. The asset continues to support strongly altcoins such as Ontology (ONT) and EOS, where more than 25% of the volumes are against USDT.

Additionally, trading mechanisms have helped prop up the price of USDT, indicating that lower supply serves to create scarcity. However, this is not enough to rebuild trust in USDT. The asset is not supposed to be an algorithmic coin, that is, a coin stabilized by cutting the supply. USDT is supposed to be backed by dollars in bank accounts.

https://twitter.com/karbonbased/status/1056895677593198592

Following the latest intervention, the USDT market price inched closer to $0.99. On Kraken, it was around $0.98. But the market is extremely thin, and more active attempts at selling could tank the price. The premium of BTC prices on Bitfinex has also dropped, holding below $100 for days now.

However, clear evidence of the funds is lacking. Additionally, the retired and burned funds should mean that the Tether company is sitting on more than $1 billion in cash held in a bank.

Right after seeing USDT locked away, Bitfinex kept refilling with transactions of hundreds of thousands of coins. The actions look like a phased-out bank run on Tethers, and the funds seem to come from private wallets. Several transactions of a few hundred thousand USDT have been made between exchanges.