This bear market seems to mean it particularly “well” as the Tether FUD is now making a reappearance in this cycle.
As NewsBTC reported earlier today, USDT has slightly lost its peg to the US dollar as the Curve 3Pool has lost its balance. The reason for this is that whales are selling USDT and tradingSponsored Product it for USDC as well as DAI. However, according to Tether CTO Paolo Arduino, the company is “ready to redeem any amount 1:1 against US dollars”.
Historically, the de-pegging of USDT is not uncommon. Samson Mow writes:
Tether FUD is always the FUD bottom. It’s what they pull out when there’s nothing left. Up soon.
Analyst Miles Deutscher has a similar view. He explained: “Fun Fact: Stablecoin FUD often marks local bottoms,” and shared a chart showing previous instances where stablecoin FUD coincided with local bottoms in Bitcoin’s price.
Bottom Signal For The Bitcoin Price?
As can be seen in the chart, the Tether FUD first surfaced at the end of June 2022. At that time, news emerged that hedge fund Fir Tree Capital Management was shorting Tether after Terra USD collapsed. Contrary to speculation, however, Tether was able to process all USDT redemptions.
In mid-November 2022, cryptocurrency exchange FTX went bankrupt after Binance backed out of a purchase agreement. The Tether FUD hit a six-month high and the price of USDT fell temporarily. Again, Tether was able to handle all redemptions while Bitcoin’s price found a local bottom.
Most recently, USDC depegging provided another signal for a local bottom in March this year due to issues with Circle’s counterparty Silicon Valley Bank (SVB). Crypto whales tried to take profits from the situation at that time while other USDC holders sold out of panic.
Tether emerged as the clear winner from this situation and captured large market shares from USDC since then. Most recently, they reported huge profits which they are investing in Bitcoin.
This is why crypto expert Thor Hartvigsen believes that it is unlikely for Tether not having enough funds to settle all USDT redemptions given their recent financial performance:
“According to Tether, the company made $1.48b in profits in Q1 alone which brought reserve surplus to $2.44b.They’ve further been winding down bank deposits (hold less than $0.5b here) and acquired over $53b in US treasuries throughout 2022.”
Remarkably, the price of USDT has already returned to its default level at press time. After the USDC/USDT price on Binance climbed temporarily, it was now back at its normal value.
As of press time, Bitcoin’s price was holding slightly above $25,000 despite the Tether FUD. However, dropping below the 200-day EMA is somewhat critical as BTC fell below this indicator during the previous depegging event with USDC. Therefore, Bitcoin bulls are advised to stage a similar reaction as in March to prevent a further plunge.
Featured image from iStock, chart from TradingView.com
#Heres #Tether #FUD #Good #Bitcoin
