- An article by Crypto Anonymous claims that Tether’s potential failure would be disastrous for Bitcoin.
- ARK Invest believes the stablecoin’s failure will, in the long run, be beneficial for Bitcoin.
- Bitcoin is holding above $32,000, but price movement is capped under the 200 SMA on the 4-hour chart.
Tether (USDT), the largest stablecoin ever issued, has found itself at the center of discussion again, following an article published by Crypto Anonymous. According to the digital publication, Tether is to blame for extreme Bitcoin price manipulations. Moreover, it describes the stablecoin’s operation as a “doomsday machine” that could paralyze both the Bitcoin network and BTC as a cryptoasset.
The author of Crypto Anonymous believes that Tether has been a fraud from its inception, besides being used to manipulate Bitcoin price. For instance, Tether Ltd, the company that issues the stablecoin, says that 1 USDT is equal to a flat rate of $1. It achieves this balance by holding in reserve $1 worth of each USDT token in circulation.
However, Tether has for a long time been scrutinized over this claim. Auditors ascertain that while all Tethers are backed, the assets are not entirely in USD. Moreover, the article says that Tether has refused to identify the assets in reserve apart from the US dollar. Therefore, it raises questions as to whether these assets exist at all.
Tether comes in handy for every trader in the modern crypto market by providing liquidity. It is easier to hold USDT and then use it to buy Bitcoin and other cryptocurrencies. Traders and investors also find it easy to withdraw their funds from exchanges using USDT.
The investment firm ARK Invest finds the claims by Crypto Anonymous to be nothing but outrageous. ARK Invest affirms that Bitcoin is not new to such “kind of “Fear, Uncertainty, and Doubt (FUD).” Since 2018, critics have come up with similar allegations portraying Tether as a potential catastrophe on BTC. According to ARK:
The latest article relies on misleading data and exposes a significant misunderstanding of Tether’s mechanics. While Tether operations are somewhat opaque, the scrutiny it has faced since 2018 would suggest a low probability of outright fraud.
However, ARK goes head to say that in the event Tether fails, “its impact on the Bitcoin network and bitcoin’s price would be short-term and perhaps di minimis.” There is no doubt that Bitcoin will suffer erratic price action and perhaps deterioration of confidence in crypto, but these will be short-lived.
Bitcoin struggles to sustain the uptrend to $40,000
BTC is trading at $32,294 while dealing with an immediate resistance at the 200 Simple Moving Average. The recent spike to levels above $34,000 became unsustainable due to rising overhead pressure. At the time of writing, holding above $32,000 is key to keeping the bears in check and ensuring bulls focus on regaining the ground beyond $34,000.
BTC/USD 4-hour chart
It is worth mentioning that Bitcoin may freefall to $25,000 if it loses support at $30,000. The breakdown will be characterized by extreme panic selling, which will increase the overhead pressure. However, subtle support at $28,000 will absorb some of the selling pressure, thus slowing down the drop.