Tether bombshell leads to 5% wipeout of bitcoin, can the market recover?

gepubliceerd op by Cryptoslate | gepubliceerd op

The Tether allegation by the New York Attorney's office goes further than the short-term price movement of bitcoin and other major cryptocurrencies.

If Bitfinex did lose $850 million in a transaction the company sent to a company based in Panama called Crypto Capital Corp and granted itself access to $900 million worth of Tether's cash reserves, it could have a long-lasting effect on the public image of the cryptocurrency market.

TL:DR the Tether/Bitfinex news:Bitfinex have borrowed ~700mil from Tether.

Tether allowing Bitfinex access to its cash reserves.

While some analysts expected the Tether scandal to lead to a plunge in the bitcoin price, the dominant cryptocurrency and the rest of the market recovered fairly well in a short time frame.

The recovery suggests that the cryptocurrency market's dependence on Tether has somewhat dropped in recent months with the introduction of Gemini Dollar and Circle's USDC. The merit of stablecoins like GUSD and USDC is that they are fully regulated, audited, and based in the U.S. with reliable banking services.

The noticeable decline in the market's reliance on Tether and the increase in the usage of transparent stablecoins indicate the maturation of the market in the right direction.

Although the market has dropped and the bitcoin price sunk, some experts have suggested that the Tether scandal has revealed that Tether did have a big cash reserve to support its 1:1 peg with the U.S. dollar.

Technically, Tether was backed by U.S. dollars but the troubles at Bitfinex may have hindered the ability of Tether to remain 100 percent backed purely with cash at all times.

Based on the swift recovery of bitcoin in the past hour, the market may be expected to rebound in the short-term, considering that the response of the investor community in crypto has been mixed; while some believe that it can be considered as evidence to prove Tether's cash reserves, many remain skeptical about the practices of the company.

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