Tether no longer able to pump crypto prices in major dump season like now

25 Aug, 2018
by Fifi Arisandi
Tether no longer able to pump crypto prices in major dump season like now

The stablecoin, Tether, which has been allegedly used to pump crypto prices seems no longer able to have a similar impact in a major dump season like now.

A study conducted by a professor at the University of Texas showed that “Tether seems to be used both to stabilize and manipulate Bitcoin prices.” In the past, the creation and the release of Tether token in the market often happened right before a rally in Bitcoin price.

However, in major dump season like today, where an estimate of $209 billion of cryptocurrency is being dumped, the creation of over half a billion dollars in this month alone hasn’t been showing the expected results. Bitcoin is reported to go down as much as 15%.

Tether that boasted to be a stable alternative to the highly-volatile Bitcoin, started trading in 2015. Said to be backed by the USD, the stablecoin has been traded at around $1 and there has been $2.8 billion of the coin being issued ever since.

The issuance of the stablecoin has been connected to the increase of Bitcoin price, however, a research by Chainanalysis showed that Tether is also linked to other coins, such as Ether and Litecoin. Last year, Tether showed a correlation to ETH and LTC about 85% of the time, while between January and June this year, EOS and NEO kept a high correlation to the stablecoin use.

The research paper stated, “While on-chain transaction activity was in decline for the major cryptocurrencies, traders were still seeing opportunities for profit with some of the newer, lower-volume cryptocurrencies.” Furthermore, it said, “A sudden spike in a particular trading volume followed by an abrupt decline is characteristic of price manipulation.”

The research made a conclusion that, “High volatility for low-volume Tether trading pairs is a typical sign of pump and dump activity.”

The company behind Tether, which is also behind the controversial British Virgin Islands-based exchange, Bitfinex declined to make comments on any of the research claims.

According to Omniexplorer, in this month alone, Tether has created $515 million of new tokens. All the new tokens were delivered to Bitfinex before moved to the other exchanges, such as Bittrex, Poloniex, Huobi, OKEx, Binance, and Kraken.

The issuance, however, hasn’t seemed to have affected any coins this time, with EOS’ 37% and NEO’s 44% price drops between July 30 and August 21, as reported by Bloomberg.

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