In the last 48 hours, $180 million worth of Tether (USDT), a stable coin, has been printed, a development which analysts say is a net positive for Bitcoin and crypto.
Over the last trading month, prices of leading assets, including commodities and stocks, have plunged as the world was slowed down because of coronavirus pandemic.
However, there are signs of a recovery in crypto as the significance of Bitcoin and leading digital assets is laid out bare to the world.
BTC Prices Flat-Lines amid Multi-billion Central Bank Stimuli
At the time of press, Bitcoin was up four percent to $5,424, an encouraging improvement from the $3,800 lows of last week.
Then, BTC prices tanked to multi-months lows, stoking fears that the asset would further slump to 2018 lows of $3,200 despite Bitcoin halving, a bullish event, in the next 49 days.
After a cataclysmic failure, Bitcoin prices have since flat-lined and hovers above the $5,000 mark as traders watch its price amid central bank interventions and multi-billion stimuli from the UK, Europe, and the United States.
Flow to Bitcoin?
We cannot understate the role of Tether. The stable coin plays a critical role in crypto market liquidity. It is a preferred conduit for players to either enter the scene or exit during periods of market turbulence.
They can issue the coin not only from Ethereum, as an ERC 20 token, or from Tron. Because of this, the coin is preferred by traders, thanks in part to its liquidity and support by leading cryptocurrency exchange.
— Justin Sun (@justinsuntron) March 17, 2020
As more USDT is minted from the Tether Treasury, traders now say all this fresh capital injection is flowing into crypto and specifically Bitcoin. For good reasons.
Judging from history, there is a positive correlation between Bitcoin price performance and the timing of new USDT mints. Some observe that when new coins are minted, BTC prices rise after a few days.
How to predict the price of Bitcoin？
The answer turned out to be related to usdt！ pic.twitter.com/c4qA8AZyUu
— STOwhite (@STOwhite) March 11, 2020
At current prices, that may happen.
USDT as a Shield from Hyper-Devaluation
There are doubts whether this recent generation will be enough to yank BTC from the grip of bears.
One commentator explains that this amount is “too small amount to make a difference if building a position. Unless this ‘someone’ wants to gamble it on leverage.”
But Su Zhu, the CEO of Three Arrows Capital, reasons that the surge in USDT mint is because of the ongoing emerging markets currency hyper-devaluation. In the case of a fall, USDT is their first exit.
“With zero interest rates on USD, I predict massive global inflows into stable coins as there is no longer any opportunity cost to holding stable coins vs leaving cash in the bank. With the ongoing hyper-devaluation of emerging market currencies, this will be their first exit.”
With zero interest rates on USD, I predict massive global inflows into stablecoins as there is no longer any opportunity cost to holding stablecoins vs leaving cash in the bank
Moreover, w the ongoing hyperdevaluation of emerging mkt currencies, this will be their first exit https://t.co/1r5pMLdE0n
— Su Zhu (@zhusu) March 19, 2020