Chainalysis argues that a new issue of Tether (USDT) could slow down Bitcoin’s bull run (BTC). In the weekly Market Intel newsletter, the company’s chief economist, Philip Gradwell, said:
The newly issued Tether that hits the exchanges can be used to buy Bitcoin as much as the existing Tether. But making this distinction shows that in today’s market, fiat money would be driving the purchase of Bitcoin to a greater extent if a new Tether issue had not reached exchanges, as shown by the difference between the yellow and pink lines.
Source: Chainalysis Market Intel Newsletter.
Gradwell posited that the price change is mainly affected by the entry of fiat money into the market: “At present, the data suggests that the current price increase is driven by the demand for fiat money.” Therefore, he concludes that if Tether had not been issuing new coins, more fiat money would have entered the market. Although this may be true, It is also possible that at least some of the traders who buy Bitcoin with Tether used other stablecoins or simply exited the market entirely.
According to the firm’s data:
Over the past year, the value of Tether sent to exchanges was equal to 48% of the value of Bitcoin sent to exchanges. So, there was enough Tether to buy almost half of the Bitcoin that were for sale.
Gradwell concluded that the other half must have been bought with fiat money, arguing that the role of the other Bitcoin trading pairs was negligible. Reports had previously been made against Bitfinex and Tether, accusing them of manipulating the price of Bitcoin.
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