- TokenAnalyst discovered a correlation between Bitcoin price and Tether issuance.
- Ethereum-based USDT issuance has more potential as a driving force behind BTC movements.
The researchers from TokenAnalyst found out that Bitcoin price has been growing on a day of Ethereum-based USDT issuance in 70% of cases in 2019.
Tether has issued coins on Omni blockchain (pertains to Bitcoin) and Ethereum blockchain worth of $1.5 billion.
The researches noticed, that Bitcoin grew in 19 out of 27 cases of USDT issuance based on ERC-20 standard (70%). In the case of Omni issuance, Bitcoin grew in 12 cases out of 24 (50%).
Analysts found out that the larger the issuance at Omni, the more likely Bitcoin will drop (the correlation between the number of tokens and the price movement was -1.6%). The situation is different with Ethereum tokens (the correlation was registered at 15.8%).
Explaining the discrepancies, Sid Shekhar, co-founder of TokenAnalyst, said:
“I think the discrepancies are appearing recently primarily because Tether on ERC-20 is just much easier than Tether on Omni to use as a means of transferring value quickly. Ethereum is a speedier chain than Bitcoin. As Tether is primarily used as a way to realize gains and get in and out of volatile crypto-asset positions in times of market movement, the speed of transferring into/out of it is critical.”
Bitcoin traders can track changes in Tether issuance for decision-making purposes.
“Traders can leverage this knowledge by tracking mints and burns of the ERC-20 Tether token as it’s closely tied to movements in Bitcoin prices,” Shekhar added.
Notably, the US Department of Justice lookied into possible manipulation with the Bitcoin exchange rate using the Tether issuance during 2017 rally. Also, this is one of the most popular conspiracy theories in the industry.