2018 has not been kind to cryptocurrency holders, particularly those who bought at the top of the market in late 2017 and have wondered since if prices will ever recover. Though Bitcoin is higher than it was a year ago, prices sunk to an 8 month low over the weekend, dropping below $6,000. Things have steadied a little since then with prices up 6% overnight and holding around $6,300 at time of writing.
At times like these everyone is looking for signs that a recovery is on the way. Charlie Lee, the co-founder of Litecoin, might just have found such a sign.
This afternoon Lee alerted his followers that Tether has just “printed” $250 million dollars of USDT. There is no pressing need for USDT, a dollar-backed cryptocurrency, other than as substitute for dollars on exchanges which cannot for legal reasons offer dollar trading. If Tether is expanding the supply of USDT then $250 million is entering the cryptocurrency market.
More USDT, more Crypto buying?
Lee says that historically such Tether expansions have acted as “a precursor of price going up.” The currency is created “when people deposit USD and get USDT back.” As that USDT is used to buy other cryptocurrencies, the effect is akin to “someone depositing $250MM to exchanges.” Though not significant in terms of total cryptocurrency market cap, such an injection of new money could certainly make an impact on daily trade volumes and prices.
However, he noted that readers should do their own research, and that there was no guarantee that the USDT will be spent anytime soon.
Generally, this has been a precursor of price going up. Tether gets printed when people deposit USD and get USDT back. This USDT will then be used to buy crypto. This is similar to someone depositing $250MM to exchanges. Of course, that doesn’t mean they will buy right away. DYOR https://t.co/zg2PEjGohv
— Charlie Lee [LTC⚡] (@SatoshiLite) 25 June 2018
Lee was also careful to note that the phenomenon only occurred “generally.” As pointed out by Ben Wagstaff, Tether “printed” $300 million USDT on the 20th March, and prices kept on falling.
That’s why I said generally. It’s not always the case. But if it dumps it’s not because of this newly printed USDT.
— Charlie Lee [LTC] (@SatoshiLite) 25 June 2018
Investors will be hoping that this is one of those times when the “general” effect holds. In common with most of the crypto market Litecoin has recovered somewhat from the weekend, up 8% at time of writing.
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