Bitcoin (BTC) buying now is just an inflow of Tether (USDT)
Bitcoin (BTC) has managed to hold on to its top spot as the most valuable digital currency, thanks to an uptick in Tether (USDT) tokens in trading. Though the market has seen a delay in capital inflow from institutional investors, investors are increasingly using USDT tokens for trading Bitcoins.
Experts believe that in the next few years, prices of coins will move based on actions of crypto insiders rather than institutional traders.
Tether is currently the top currency contributor to bitcoin trading volumes, accounting for 51 percent of the total volume on Tuesday, data from CoinMarketCap showed. This is attributed to the fact that Bitfinex accounts for most of the Bitcoin trading volumes, contributing to nearly 36 percent of Tuesday’s total volumes.
USDT is a modified digital version of the U.S. dollar, allowing investors to trade in crypto-only exchanges which do not allow dollar deposits. The coin is pegged to the U.S. dollar in a ratio of 1:1.
Concerns over USDT being backed by U.S. dollars
Tether is among the most controversial cryptocurrencies, with questions raised as to whether USDT is backed by actual U.S. dollars. Currently the number of USDT in circulation is 2.61 billion, which means there should be a matching number of dollars in bank accounts. But, no audit has been conducted yet to ascertain whether the money actually exists.
Many have also flagged concerns over the connection between Tether and the Hong Kong-headquartered Bitfinex exchange. The digital currency, also known as the “stable coin”, is operated by the same people who run one of the world’s largest crypto exchanges in the world.
Additionally, there is no mechanism to stem the supply of these tokens in the market. Whenever new USDT tokens are issued, it creates a bullish market scenario, which has led to skeptics claiming that Tether has manipulated prices.
Tether, Bitcoin price predictions
As of 1000 GMT, USDT was trading 0.07 percent higher at about $1 while Bitcoin was down 3.5 percent at $6,457.35.
According to WalletInvestor, the coin is expected to gain 1.34 percent against the U.S. dollar while Bitcoin is expected to more than double its value in a year.
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