Tether Expands Bitcoin Reserve to back USDT

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By A D

As Tether leans on Bitcoin to strengthen USDT, and BTC stays steady around $27,000, the long-term outlook for the crypto space looks positive.

Tether recently revealed its plans to allocate a significant portion of its net realised operating profits to Bitcoin. Thether is allocating 15% of its investment profits, almost $222 of its $1.48 billion Q1 net profits, towards Bitcoin to back USDT. Tether’s BTC reserve is currently at $1.5 billion, and would grow by $200 million in value after this move.

Stablecoins, such as Tether’s USDT, play a crucial role in the cryptocurrency ecosystem by providing stability and acting as a bridge between fiat currencies and digital assets. With a circulating supply of more than $82.8 billion, USDT gives tough competition to other players in the field like Circle’s USD Coin and Binance’s BUSD. Tether’s move to allocate profits to Bitcoin represents a strategic effort to enhance the stability and credibility of its stablecoin, mainting a 1:1 peg to the US dollar.

CTO Paolo Androino also joined the discussion over his discussion on twitter.

These advances by Tether signals the growing recognition of Bitcoin’s longevity and the potential for long-term value appreciation. By backing USDT with Bitcoin, Tether aims to increase its resilience to market fluctuations and potentially attract more institutional investors seeking exposure to both stable assets and Bitcoin’s upside potential.

Because of doubts about the calibre of its reserve assets, strategies by Tether for keeping its token’s value at $1 have in the past generated criticism.Their misrepresentation of the reserves backing its stablecoin resulted in a sanction from American regulators in 2021. The Commodities Futures Trading Commission (CFTC) and the Attorney General of New York each imposed a $41 million fine on the corporation for how it handled reserves.

Recent Price Trends for Bitcoin

  • Bitcoin emerged as one of the top three assets, the two others being Gold and U.S Treasurys, preferred by respondents in the event of a US debt default. The survey’s findings indicate a growing recognition of Bitcoin as a safe haven asset and a potential store of value during times of economic uncertainty. Bitcoin-based NFT sales, too, have secured the second spot in overall blockchain sales. Ordinal Incriptions has increased sales by 1.46% in a week, taking the value upto $149.31 million.
  • Bitcoin’s current long-term metrics compares to the early stages of previous bull markets. Key indicators such as the logarithmic regression bands, the stock-to-flow ratio, and the network value to transactions ratio (NVT) suggest that Bitcoin is exhibiting similar patterns seen in past bullish cycles.
  • There was a recent bump in Bitcoin’s network congestion consequentially giving way to higher transaction fees. While this is said to have been an obstacle for users, BRC-20 network miners have made $17.75 million in revenue out of it. Additionally BRC-2O tokens have contributed to more than 40% of fees Bitcoin’s blockchain, accounting for 60% of transactions.
  • The potential consequences of a debt limit standoff is also speculated to affect the broader financial markets, including Bitcoin. The debt limit refers to the maximum amount of money that the United States government can borrow to meet its financial obligations. Uncertainty surrounding global economic stability often drives investors toward alternative assets like Bitcoin.
  • The realised price reaching the “1-year HODL Wave” point, indicating that the majority of Bitcoin holders are now in a position to sell at a profit. Realised price refers to the average price at which all coins in circulation were acquired. The Realised price falls just short of the LTH (long-term holder) price of $20,845 by 3.5%.
  • The Bitcoin Realised HODL Multiple has been on a upward trend in the last 90 days. There has also been a substantial accumulation of Bitcoin by whales, these whales have amassed approximately $2.3 billion worth of BTC, about 84,897 BTC, within a span of five weeks.
Bitcoin price chart for the week shows a steady movement around $27,000
BTC’s price has been hovering comfortably above $27,000. Image Source

These developments suggests a potential shift in market sentiment and the possibility of increased selling pressure, which could impact Bitcoin’s price dynamics. So far, Bitcoin has had a YTD (Year-to-Date) rally of 63%. At present, BTC is trading above its 200 day Moving Average at $27,187.70. Although ambitious month-end predictions of $45,000 or $60,000 don’t seem feasible, it would be fair to say the long-termm aspects look promising.

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