- Stablecoin giant Tether just unleashed 1 billion USDT for the crypto market.
- Analysts expect the event to trigger another bullish scenario for crypto, but others warn of possible market manipulation on the sidelines.
Tether minted an additional 1 billion USDT on Sunday. The event, confirmed by onchain monitoring platforms and exchanges like Bitget, led analysts and the cryptocurrency community to debate the possible effects of the latest stablecoin supply inflation in the market.
Tether’s 1B USDT is an Ammo to Buy the Dip
As the market treads over bearish sentiment, with the Crypto Fear & Greed Index still showing a cautious market at a rating of 29 under the “Fear” territory on Sunday, many consider the increased liquidity as a bullish signal. If injected into crypto, observers like the pseudonymous EyeOnChain argue that it could be ammunition for traders and investors to buy the dip, which could result in another round of volatility.
The additional USDT becomes readily available capital once Tether distributes the new supply to exchanges, market makers, and institutional players. It would enable them to buy the dip or accumulate digital assets at lower prices. This could create upward pressure in Bitcoin (BTC) and altcoins, as most see these whopping stablecoin mints as institutional preparation for an eventual rebound.
Ensuring Crypto Market Stability
USDT remains the primary base trading pair for most exchanges. After all, USDT’s market cap of $181.91 billion represents an over 57% share in the $316.38 billion stablecoin market as of Sunday.
More USDT reserves ensure deeper order books, reducing price slippage on large trades. The liquidity boost is also crucial during market volatility to guarantee market efficiency and smoother transactions to let traders and investors enter and exit their positions quickly.
Market Manipulation Brewing
On the other side of the fence, critics like SwanDesk CEO Jacob King warned that Tether’s efforts could be a sign of market manipulation. According to him, Tether and Circle (USDC) have printed over $4.5 billion in stablecoins since the previous market crash.
King suspects these parties are pulling the strings in the crypto market by artificially inflating stablecoin supply. Tether, in particular, has been under constant scrutiny over transparency issues in its reserves.
BitcoinTreasuries.Net reflects 87,475 BTC under Tether’s coffers. Moreover, the stablecoin issuer’s CEO, Paolo Ardoino, confirmed that their company maintains 80 tons of gold reserves worth more than $8 billion in a “secure location in Switzerland” to back their assets. Tether’s attestations, however, have not been thoroughly verified by comprehensive, independent third-party audits.
The SwanDesk CEO accused Tether and Circle of dumping more stablecoin supply in the market to prop up crypto recovery, particularly Bitcoin. He claimed that BTC would still be trading under $50K without these market maneuverings.
Final Thoughts
The crypto community and analysts’ contrasting outlook on Tether’s recent minting of 1 billion USDT indicates that there’s no crystal clear assurance that it could either lead to a bullish or bearish outcome. Depending on certain catalysts, including but not limited to macroeconomic issues, geopolitical tension, regulatory developments, and heated leveraged positions in the crypto market, the effect could be any of two scenarios.
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