Bitcoin has had a bad run in the last week, with prices dipping at as low as $9,200. But, Tether printing has come to the aid of the digital currency, issuing $400 million in just four days ($100 million each day). This has contributed to the increase in Bitcoin value once more, but there are worries about what could happen if the music stops.
Is Tether Really a Savior?
There have been mixed reactions by the Bitcoin community about Tether. Some say that the move is important in bringing Bitcoin back to its ormer glory, while others are worried that when the supply line is cut off, crypto markets won’t have enough new money.
Bitfinex is the main exchange that controls Tether, issuing the dollar-pegged tokens, but other exchanges such as Bittrex and Kraken also rely on them. This means that if anything happens to Tether, all of them will be affected.
The amount of Bitcoins that are created daily is worth around $18 million. In order to cover utility costs, miners have to sell most of them. Maintaining the current prices means that $18 million needs to come in daily into the markets. Considering that $400 million of tethers was released into the market, yet the price of Bitcoin remains sluggish, there’s cause for alarm. If it hadn’t been for the newly-created cash by Tether’s torrent, we would have witnessed an even greater dip in prices across the crypto market.
Bitcoin Community Should Keep the Faith
At this point, no one believes that Tether gets $100 million on a daily basis. The release of these Tethers keeps the Bitcoin market afloat, even with regulatory uncertainty and negative news. As long as the Bitcoin community collectively believes that the Tethers are real, then they are. The markets are just a manifestation of human psychology.
Tether is pegged to the real dollar. In the past month alone, the markets have seen more than $1 billion worth of Tethers being issued. If a case surfaces where Tether does not match a corresponding amount of dollars in its bank, everything will come crashing down.
What do you think about the idea of pumping $400 million worth of Tethers into the market to prop up Bitcoin? Do you think it really worked? What if the move isn’t sustainable? Tell us what you think.