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Tether Loses Ability to Sway Crypto Market

New tether emissions are not influencing the market anymore, failing to make an impact on the rest of the market. The recent decline in the market means it has become harder to sway, or at least that’s what the rate dynamics suggests. Creators of tether are being constantly accused of manipulating the price of cryptocurrencies, including bitcoin (Bitcoin) . Just in August 2018, half a billion worth of tether was issued and in the past, such action was always followed by market rallies but now the bitcoin is not breaking any new records despite a recent rise.

In 2017, the correlation between the two assets was much higher according to research coming out of the University of Texas. It claimed that tether was used to both manipulate and stabilize the price of bitcoin.

Passions regarding Tether and Bitfinex – one of the largest crypto exchanges – are still high since the past year, when Bitfinex lost all connections to banks and yet continued operating. What is more revealing is that both projects have the same owners. In December, the U.S. Commodity Futures Trading Commission (CFTC) issued an inquiry to both firms to find out if all tether coins are truly backed 1 to 1 by the U.S. dollars. No signs of misconduct were found.

According to the company’s website, to date, 2.8 billion tether dollars have been issued, with the rate of the token is as always bouncing at around $1 – since the whole idea of the token is to tie it directly to a U.S. dollar, supported by bank reserves of equal value. Tether emerged in 2015 as a stable alternative to the bitcoin, aimed at protecting investors from the high volatility of the first crypto.

And smaller currencies are also reportedly being manipulated through tether. According to the research conducted by Chainalysis, during 2017, 85% of the time tether correlated with the dynamics of bitcoin ethereum (ETH/USD) and litecoin (LTC/USD) . After the market crash which marked the start of the year, that number grew to 93%. However, during the same period, the correlation between tether EOS (EOS/USD) and NEO (NEO/USD) remained at a similar, high level.

“High volatility for low-volume Tether trading pairs is a typical sign of pump and dump activity; i.e., a sudden spike in a particular trading volume followed by an abrupt decline is characteristic of price manipulation,” according to the document.

In August tether has created $515 million worth of new tokens and all of that cryptocurrency went straight to the Bitfinex exchange, which is also mentioned in the research. Chainalysis writes: “After issuance, all Tether passes through the Bitfinex trading platform, Tether’s only direct client, and 80% of newly issued Tether then moves to seven exchanges.”

From it, roughly 80% of tether go onto 6 other exchanges Bittrex, Poloniex, Huboi, OKEx, Binance и Kraken. But even such a big injection of tokens has failed to directly impact the price of EOS and NEO.

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