The value of stablecoin’s reserves more space in the crypto market leading to more sell-off of other cryptocurrencies and reducing bitcoin price as well. Added to this, stablecoin Tether ranks sixth in market cap with a market cap of over $59 billion, which dominates other tokens and cryptocurrencies.
Caitlin Long posted a tweet on Saturday saying,
1/ SOME THOUGHTS on #stablecoins & the #crypto selloff, which are probably connected.— Caitlin Long 🔑 (@CaitlinLong_) May 15, 2021
HUGE news last week & it matters far more than @elonmusk or @binance news. A long thread 👇: pic.twitter.com/itRfCfY1d3
Furthermore, Long delivers this would be a negative surprise for all traders that Tether will be the reason for selling more crypto’s last week. In addition, Caitlin advises traders to avoid the risk and security by holding other cryptocurrencies. More so, stablecoins gain the potential to break other crypto’s in the market.
Role of Tether in Crypto Market
Moreover, Tether stays as credit assets by investing firms, the value of bitcoin and other crypto’s can be easily predicted with credit markets.
According to Caitlin Long,
“One of the best things for industry at present would be getting stablecoins to be okay with U.S. regulators. Stablecoins are very important bridges between crypto and the U.S. dollar.”
Moreover, Tether holdings limited reports a Tether reserves breakdown with different categories. 75.85% consumed by cash other short-term equivalents with 65.39%accounts for commercial papers. Tether invested only 2.94% in treasury bills out of total cash which can increase the risk.
However, the present market price of bitcoin dropped below $45,000 and the overall price of other cryptocurrencies fell 20% in the last weeks. Therefore, the role of Tether in current market collection is vague.
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