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The Teeter of Tether

Stablecoins are coins that are supposed to stay stable in value, a value that is typically pegged to a fiat currency. Tether is a stablecoin that’s supposed to remain at the same value as one USD. Complete correlation between the two values is improbable. Often we see Tether valued between $0.995 or $1.005 USD.

Tether’s valued is ‘tethered’ to the US dollar.

Until it isn’t.

The Unrest

Shockingly this morning, Tether’s value dropped to $0.969617 while almost all other Binance USDT coins rose in value (including Bitcoin momentarily valued at over $7,000). Not to mention that Tether’s market volume has nearly tripled in the past couple days from around 2 billion to over 5 billion.

Why the sudden drop in price?

Decreasing Value + Increasing Volume = Withdrawing Investors

Investors are becoming uncertain in the stability of Tether. Since its creation in 2014 Tether has held a near 1:1 with USD until just last week when we began to see price fluctuations occur. But why would investors suddenly seem unsure in the stability of Tether?

Well, I’d like to begin by pointing out that Tether has made no comments about their recent price fluctuations and has been Twitter silent since August. Tether has also remained silent on their own website and all other social media in recent months.

Suspicions have begun to arise about the companies validity in recent weeks. Some claiming that Tether does not have adequate fiat currency reserves to back their value.  Because of their silence and possible financial faults, some market experts believe that Tether may soon begin liquidation.

Will Tether Teeter off the Edge?

Tether currently possess the 8th largest market cap at about $2,430,269,269 USD. Because of this, most say it’s unlikely that Tether will fall off the crypto market scene. Cryptobriefing.com compares Tether to the Titanic. The Titanic was thought to be unsinkable because of its size. Is Tether the same way?

It’s a large claim to say Tether’s value will sink.

I wouldn’t yet make such a claim, though I currently picture Tether as teetering on the edge of a cliff. Their next move may decide their fate.

What happens if Tether Teeters?

Besides the obligatory cries from Tether investors, what will happen to the market? Because of Tethers market power, if it teeters it certainly will have an impact on the crypto market.

Today was a great example of what would happen if Tether falls over the edge. When Tethers value dropped this morning, it sent the value of other cryptocurrencies upward. I believe the more Tether teeters downward, the more other large coins like Bitcoin and Ethereum will benefit. With investors pulling out of Tether, those same investors need to put their investments some place else. There’s no better place than to revert back to those top few coins that have a low likelihood of ever tanking.

What’s going to happen to Tether?

There’s no good way to tell just yet. All I have to say is don’t lean to far over the edge holding hands with Tether. You may lose your footing.

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1 comment

CryptoRow October 19, 2018 at 7:15 pm

I really love this graphic!

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