Recently, Live Bitcoin News published a piece that suggested the current bitcoin price rally may have been the result of further tether manipulation.
Bitcoin and Tether: What’s the Relationship?
In 2018, a report emerged (authored by Texas finance professor John Griffin) that suggested bitcoin’s rally during the prior year had been the result of individuals using tether to purchase bitcoin whenever it showed any sort of deviation or fall from its previous highs. This allegedly tied bitcoin to USD, as tether is a supposed stable currency, and allowed the currency to spike further. It was a case of manipulation 101.
Since that time, crypto skeptics have stated that tether is once again in the mix, but Kraken CEO Jesse Powell says otherwise. He dismisses the claims and states that bitcoin’s good fortune as of late has little to do with the stable coin and more with growing market demands.
In an official interview, Powell explains:
I don’t have inside knowledge of what’s happening at tether, but I can tell you that historically, when you’ve seen growth in the supply of tether, we’ve seen growth in the supply of U.S. dollars coming onto Kraken, and other exchanges would report the same.
He further states that despite its growing reputation, tether is a relatively small currency that’s incapable of bringing about heavy change to bitcoin and the general crypto space:
Recently, we’ve had massive inflows of fiat currency, so I believe the tether prints are a result of new fiat coming in… I don’t feel like tether is artificially inflating the price of bitcoin. I think tether is actually a small part of the total fiat supply among all the exchanges.
Bitcoin still largely dominates the crypto space, and is the number one form of cryptocurrency by market cap. It is unrivaled by even its “number two competitor” Ethereum, which at press time, is only trading in the high $200 range. Compare this with bitcoin, which despite being down for the count, is still trading for nearly $11,000 at the time of writing.
Too Small to Make a Difference
Tether does not even come close to bitcoin or Ethereum, and Powell doesn’t see the coin as having any major influence on the former entity. He says that bitcoin’s behavior as of late is the result of varying behavior on exchanges, and the fact that many more customers have sought to get involved in crypto over the past several weeks:
There are days when you see the price going up ten percent a day. You can bet all the exchanges are onboarding fifty to a hundred thousand new users a day [when that happens]. That is what is driving up the price. It’s a huge retail demand and all the media attention on it, not tether.