Bitfinex Keeps Bleeding Bitcoin (BTC) While Tether (USDT) Wallet Bloats

The past weeks have seen the emergence of a pattern which once again suggests the potential for panic and loss of trust in the USDT stablecoin.

Bitfinex and Tether (USDT) keep giving indications of trouble, based on accelerating movements of Bitcoin (BTC) out of the exchange. At the same time, the Bitfinex Tether wallet is positively bloated, adding hundreds of millions of USDT over the weekend.

As per the latest data from the Tether Rich List, Bitfinex lines up second with 486,678,763 USDT, growing significantly over the past couple of days. At one point, the Tether Treasury wallet retired 200 million USDT from the exchange, limiting the supply. Without that transaction, Bitfinex would have held an exorbitant 686 million USDT.

In the past, traders have noted a connection between USDT retired to treasury and sell-offs in BTC:

https://twitter.com/steadydee/status/1051567006187757569

However, the uncertainty of USDT might, in fact, raise BTC prices. Since USDT in effect trades below $1, the price of BTC may look higher. Even now, BTC commands a premium at around $6,380 on Bitfinex, whereas it is below $6,300 on other exchanges. On Kraken, attempts to liquidate USDT have dragged the asset’s price down to $0.97.

At the same time, the leading Binance Tether wallet, which had remained without change at around 808 million USDT, is being emptied out. Funds were moved to an alternative Binance wallet containing about 61 million USDT.

Adding to the doubts about Bitfinex are the renewed withdrawals of BTC from its cold wallet, to the tune of 4,000 BTC in the past two days. The latest 1,000 BTC withdrawal happened this Monday, October 15.

The chief worry behind Bitfinex and Tether is the loss of a banking operator, raising serious doubts about the potential of each USDT to hold $1 in cash. The financial troubles of Noble Bank in Puerto Rico and the refusal of HSBC to service Bitfinex and Tether have intensified concerns about Tether trading.

Traders expect the current trends to deepen, causing price anomalies on the market:

https://twitter.com/dadetrading/status/1051574425575809026

Meanwhile, dollar-pegged coins that trade against USDT are on the rise. TrueUSD (TUSD) rose to $1.03, with interest in another stablecoin to exit Tether pushing up the price.

https://twitter.com/TrustToken/status/1050869602295533569

USDC, Circle’s stablecoin, is at $1.02. These two coins are present on Tether-based exchanges and offer an alternative exit and a hedge in case USDT slides further. 

Neither the author nor the publication assumes any responsibility or liability for any investments, profits, or losses made as a result of this information. Cryptocurrency trading and investing are risky propositions, and market participants are advised to always conduct thorough research.