Bitcoin saw a pump up to 22 percent on Monday as a result of traders rapidly leaving Tether. There are more and more concerns about the health of the stablecoin which has led to a massive Tether sell-off.
Currently the 'Bitfinex premium' on Bitcoin is about $400. Tether itself is now trading for $0,96, $0,04 lower than the $1 that the stablecoin should represent. On the USDT/USD market on Kraken, Tether is trading as low as $0,86, a new all time low.
Tether continues to fall, showing a new All Time Low of 0.86 USD. pic.twitter.com/neVniEG3HL— ICO Drops (@ICODrops) October 15, 2018
Traders abandoning Tether and jumping into Bitcoin has sparked a rally in BTC, that is currently up 9% in the last 24 hours. People are concerned about the financial health of Tether and many are afraid that Bitfinex, which shares a chief executive officer with Tether, also shares Tether's risk of insolvency.
It's truly mindboggling to see what Bitfinex has done with Tether and its exchange.— Joseph Young (@iamjosephyoung) October 15, 2018
Bitfinex could have been one of the most valuable billion dollar companies in crypto. Yet, it threw out the opportunity out the window and shot itself on the foot.
Bye @bitfinex RIP 🙏
With a large part of the trading volume in Tether, the future is uncertain, head of business development at exchange Luno, Vijay Ayyar, says in a comment to Bloomberg. "If traders start to flee Tether, it’s a potentially precarious situation, since it accounts for 20 percent of total volumes globally. It basically implies a lot of volatility ahead", Ayyar says.
Read more: Bitfinex premium on BTC up $400, USDT drops over 3% as markets pump on Monday
Timothy Tam, CEO of cryptocurrency research firm CoinFi, doesn't think this will affect the market in a negative way. He says the rumors are 'probably a bit of paranoia'. "I believe this will all clear up relatively soon."
With more stablecoins available on the market, such as the one from the Gemini exchange and regulated stablecoin Paxos, available on Binance, there are more alternatives for Tether on the market than ever before.
BTC Price: Does the premium reflected in same exchanges represent a real premium?— Ran NeuNer (@cryptomanran) October 15, 2018
The reason , is that on Bitfinex and others the trading pair is a USDT and not a USD pair.
Since people think that Tether is not solvent they are charging a premium against a Tether purchase.
The Bitfinex Bitcoin price premium over Bitstamp now reaches over 11%. Is there a risk the Tether reserve bank wont allow further redemptions/withdrawals or is this just FUD?— BitMEX Research (@BitMEXResearch) October 15, 2018
See our report on Tether from February 2018:https://t.co/j9AXycB0ep pic.twitter.com/iPWZAycyS2