Tether Falls Below $1 As Bitcoin Demand Rises: Report

Tether falls below the $1 price point as the Bitcoin demand rises and it hit the 12-month low in March. The oldest and biggest stablecoin tied to the US Dollar dropped again while USDT maintained the par value during Bitcoin’s subsequent two-month rally as we are reading in the latest Tether news.

Tether falls below the $1 on Friday and stayed below the price point as of press time on Monday according to the latest data from major exchanges such as OkCoin and Kraken which support two of the biggest USDT/USD markets by volume. FTX and Bittrex which will support the trading pair showed a discount on the Tether prices. One explanation for the price crash is the strong buying pressure for Bitcoin on the futures markets. Tether is used as a stand-in for the US dollar on the crypto exchanges which is used to buy other assets rather than an investment. The major shifts in demand can cause Tether to deviate from its peg.

For example, the USDT stablecoin increased as high as $1.03 on Kraken back in March when Bitcoin dropped to a 12-month low during the Bitcoin-wide Bitcoin selling. Sam Bankman Fried, the CEO of FTX explained:

 “Bitcoin futures are at premiums, indicating buy pressure. That can drive up BTC/USDT and so drive down USDT, especially on margin exchanges.’’

Tether’s drop below the $1 coincides with the short respite of the latest token issuances. Bankman-Fried explained:

 “We’ve seen really strong USDT inflows for months unrelated to BTC price movements, and it’s possible those are tapering off.”

Over the past two months, Tether LTD issued more than 3.5 billion new tokens which are an average of more than 60 million tethers per day according to Coin Metrics data. However, the tether market capitalization as a proxy for supply since the redeemable for $1 which decreased by $7 million. Tether continues to mint new tokens as it minted 220 million USDT tokens on Thursday alone and the 100 million tokens were minted today only. If the Tether Foundation printer continues creating new tokens at this rate, we will see about twice as much as we did in April.