Tether Market Cap Sinks to $2.2 Billion as another 250 Million USDT Exits Circulation

tether
Advertisement

The loss of its U.S. dollar peg isn’t the only thing driving down the market cap of tether (USDT), the cryptocurrency market’s largest “stablecoin.”

Tether Falls Below Dollar Parity

The USD-backed token, which as recently as late August had a circulating valuation of nearly $2.9 billion, is now worth just $2.2 billion, representing a two-month decline of nearly 25 percent.

A portion of that decline is a direct result of USDT’s price falling below the $1.00 in assets that are supposedly backing each token. As CCN reported, the USDT/USD peg slipped away heading into Monday morning, throwing uncertainty into a market that relies on billions of dollars worth of tether trading on a daily basis on exchanges that do not support physical USD.

According to CoinMarketCap, tether’s global average traded as low as $0.92 on Monday but has since climbed back to $0.98. On Kraken, which offers a thinly-traded USDT/USD market, the tether price dropped as low as $0.85 before recovering to a present value near $0.95.

tether price chartUSDT/USD | Kraken

$560 Million in USDT Yanked from Circulation

However, given the current USDT/USD discount, the loss of dollar parity only accounts for about $50 million in lost market cap. The remaining decline is the result of Tether pulling hundreds of millions of dollars out of circulation during the first half of October.

Early this morning, Tether yanked 250 million USDT out of circulation after Bitfinex sent payments of 50 million USDT and 200 million USDT to the token’s treasury address, and it wasn’t the first time this month that tethers had exited the market.

tetherSource: Omni Explorer

CCN reported yesterday that Tether had pulled $300 million in USDT out of the cryptocurrency market through two transactions executed on Oct. 9 and Oct. 14. Altogether, 560 million tether tokens have been yanked out of circulation in October, and none have been issued since Sept. 21.

As of Tuesday morning, the Tether treasury is holding more than 736 million USDT, funds that the company’s website state have been authorized but not issued.

tetherSource: tether.to

USDT Arbitrage or Waning Consumer Confidence?

Assuming Tether and Bitfinex are operating above-board in their handling of USDT, the massive withdrawals could be connected to stablecoin arbitrage.

For professional traders who are confident in their ability to redeem tethers for USD at a 1:1 ratio on Bitfinex or — for large-scale holders — directly at Tether, the USDT/USD spread should represent an opportunity to generate easy, low-risk profit. Simply acquire USDT, deposit it at Bitfinex — where it is treated as USD — and then withdraw the funds to an external bank account.

Traders can continue to engage in USDT arbitrage as long as the exchange continues to process withdrawals (and though fiat deposits were temporarily paused in recent days the company said that withdrawals continued to process normally). Barring any unforeseen disruptions, arbitrage should eventually restore the tether price to dollar parity.

On the other hand, the withdrawals could be the result of large USDT holder seeking to diversify into other stablecoins, including the highly-touted new offerings from Paxos, Gemini, and Circle. While still much smaller than tether in terms of market cap and liquidity, these tokens — particularly Paxos Standard (PAX) — have been making significant gains in the weeks following their launches.

Notably, Bitfinex announced a new “distributed banking solution” on Tuesday, enabling it to resume fiat deposits following nearly a week of fiat deposit downtime. At the same time, The Block published a report citing anonymous sources who say that Tether has opened an account with Nassau-based financial institution Deltec Bank.

It remains to be seen whether this news will be sufficient to thrust the tether price back to dollar parity.

Featured Image from Shutterstock.

Follow us on Telegram or subscribe to our newsletter here.

Join CCN’s crypto community for $9.99 per month, click here.
Want exclusive analysis and crypto insights from Hacked.com? Click here.
Open Positions at CCN: Full Time and Part Time Journalists Wanted.

Advertisement



Coinbase Opens Office in Dublin to Serve the European Market

The leading cryptocurrency exchange, Coinbase, has announced the opening of its new office in Dublin, the Irish capital city.


Firm Starts European Operations

Coinbase, the U.S.-based leading cryptocurrency exchange, has been working aggressively to grow its business. As part of its growth strategy, the company has taken multiple steps, including the launch of services for institutional customers (Coinbase Custody, Coinbase Prime, and Coinbase Institutional Coverage group), a partnership with Caspian to provide advanced trading tools, the launch of new “bundle” offerings, and plans for adding new coins.

Now to service customers in Europe, the firm has set up its office in Dublin, the capital of Ireland. The announcement states:

The number of Coinbase customers in the European Union (EU) grew faster than any other market in 2017. As we scale, we need to attract the best, most qualified and passionate talent to help us achieve our mission of creating an open financial system for the world.

As reported by Live Bitcoin News earlier this month, the firm is also looking to raise $500 million for further expansion and was in negotiations with investment firm Tiger Global that would value the firm at around $8 billion.

coinbase

Dublin’s Growing Eco-System

The firm boiled down their choice to the city to Dublin after looking at various venues across Europe. The Irish capital emerged as the city of choice due to its local talent pool, support for technology innovation, and the growing blockchain community.

Dublin is home to many blockchain facilities and will be hosting a conference being organized by the International Organisation of Standards (ISO) next year.

“Dublin is a talent hotspot for companies like Coinbase as they scale and internationalize critical businesses operations,” said Martin Shanahan, CEO of IDA Ireland, the country’s inward investment agency. He added:

We look forward to welcoming Coinbase into the Irish economy, and helping them access our talented pool of young professionals from the technology and financial services sectors.

Ireland

A Welcome Development for Ireland’s Fintech Sector

The Dublin office would complement the existing operations in London. As the firm plans to set up new functions, it will create new jobs in the city. It will also help build expertise in blockchain technology.

Expressing his pleasure at the development, Michael D’Arcy T.D, Minister for Financial Services and Insurance, said:

I am delighted that Coinbase is opening an office in Dublin. This decision highlights the competitive offering and attractiveness of Ireland for financial services.

Coinbase continues to take aggressive steps to grow and expand its wings across different geographies. That the firm, which is one of the world’s oldest, largest, and most trusted platforms in the cryptocurrency space, wants to maintain its position as a leading player is evident.

Do you think opening an office in Dublin will help Coinbase grow its business in Europe? Let us know in the comments below.


Images courtesy of Shutterstock.

Tags: , , , ,

Dublin is the Clear Choice for Coinbase as Its Second European Office

Crypto exchange Coinbase has announced that it is expanding its European presence into Dublin giving it access to Ireland’s growing crypto economy.

In the announcement released today, the San Francisco-based exchange said the move to open a new office in Dublin is part of its wider expansion into Europe. With its headquarters for Europe based in London, the move may also have been taken to offset the impact of Brexit.

However, speaking of the announcement, Zeeshan Feroz, U.K. CEO of Coinbase, said that the addition of the Dublin office will complement the operations in London, which will remain the exchange’s headquarters.

“When considering the location of our second European office, Dublin was the clear choice – it’s an English-speaking EU member state that boasts a diverse talent pool, entrepreneurial spirit, and long-standing support for technological innovation,” Feroz added.

As a result of rising customers with the exchange in the EU growing faster than any other market last year, the exchange said that it needed to look for the “best, most qualified and passionate talent” to deliver an open financial system.

“Dublin is a talent hotspot for companies like Coinbase as they scale and internationalise critical businesses operations,” said Martin Shanahan, CEO of IDA Ireland, the country’s inward investment agency. “We look forward to welcoming Coinbase into the Irish economy, and helping them access our talented pool of young professionals from the technology and financial services sectors.”

News of the Dublin office comes at a time when the crypto exchange is building its product out to different regions. In June, the platform announced that it was expanding its presence to Asia with a new office in Japan. At the time, it was noted that the Japanese office will lay the foundations for “Japan’s crypto investors to access a range of Coinbase’s products.”

In a bid to become more attractive to institutional investors it launched a suite of products in May. These include the Coinbase Custody, the Coinbase Markets, and its Coinbase Prime. Its Coinbase Pro is an evolution of its GDAX platform, which is specifically designed for individual traders.

Founded in 2012, the platform currently has five crypto assets available on it: Bitcoin, Ethereum, Bitcoin Cash, Litecoin, and Ethereum Classic, which are available across 33 countries. Earlier this month, it announced that Ox (ZRX) was now available to trade on Coinbase Pro.