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

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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.

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Fidelity Just Removed ‘Huge Obstacle’ to Investing in Cryptocurrencies

Here is why the cryptocurrency space was largely “impressed” by Fidelity Investments announcing it will offer its 27 million customers a way to store and trade digital currencies. 


Fidelity Unveils ‘Fidelity Digital Assets’

Currently, Fidelity manages $7.2 trillion dollars, making it the fourth largest asset manager in the world. It is the leader in the United States when it comes to 401(k) retirement savings plans, and is one of the largest 403(b) retirement plan providers for not-for-profit institutions.

Abigail Johnson, Fidelity Investments CEO

Fidelity has indeed kept a close eye on the Bitcoin space over the past years. Bitcoinist reported that the firm was one of the first to add Bitcoin price 00 to its website over a year ago. It then started looking to hire crypto-fund managers. In September, CEO Abigail Johnson revealed that crypto products were underway.

Johnson didn’t disappoint. Fidelity Investments has just unveiled an entire company called Fidelity Digital Assets to focus strictly on cryptocurrency investment. One of the first crypto custody clients has been revealed to be none other than Mike Novogratz’s Galaxy Digital fund.

Paying Homage to Bitcoin Pioneers

What’s more, the cryptocurrency space was also impressed by Fidelity’s knowledge of Bitcoin’s beginnings, paying tribute to Bitcoin’s pioneers in its announcement Monday, in which it referred to cryptocurrencies as “the evolution of digital cash.”

“Impressed to see Fidelity, a financial institution of worldwide renown, appropriately pay homage to the foundational work by David Chaum, Adam Back, Wei Dai, Nick Szabo, and Hal Finney,” said Bitcoin economist, Tuur Demeester. “Shows maturity and serious commitment to the Bitcoin project.”

Nic Carter

“How’s that for infrastructure?” commentator Nic Carter rhetorically asked, pointing out that the Bitcoin network is by far the most mature crypto-asset today – so much that even incumbent banks are now entering the fray.

“…Fidelity is doing it right: a nod to the cypherpunks and predecessors to Bitcoin,” he noted.

“Abby is my favorite CEO in banking,” added Abra CEO Bill Barhydt on Twitter, praising the executive for not being afraid to be one of the first people to try Bitcoin hands-on as early as 2015.

She was mining bitcoin before other ceo’s knew what bitcoin was.

‘Removes a Huge Obstacle’

With 27 million customers, Fidelity is by no means small fish. In fact, Shapeshift CEO, Erik Voorhees, points out that there won’t be a whole bitcoin for each brokerage customer as there is less than 21 million bitcoin in existence.

“It would be impossible for every Fidelity brokerage customer to own even one Bitcoin,” he wrote. “This is why Bitcoins are worth thousands of dollars, while a dollar is only worth one dollar (and only until next year when it’s worth 97 cents). Save wisely.”
Hunter Horsley, CEO of Bitwise Asset Management, meanwhile shared his thoughts with Bitcoinist, calling this an important moment in history for this “new asset class.” He explained:

For many institutional investors, a trusted custodian like Fidelity entering the space removes a huge obstacle to investing in cryptoassets. I think we’ll look back on 2018, and particularly this moment, as the time that crypto became cemented as a new asset class.

Bruce Elliott, President of ICOx Innovations, noted that these new custodial products from ICE’s Bakkt and now Fidelity will add legitimacy to crypto markets and introduce “seasoned investors” to cryptocurrency. He explained:

Nasdaq and Fidelity are two of the most well respected brands in markets and financial services. This is a signal that financial markets and regulators are gaining clarity and comfort on the outlook for trading cryptocurrencies.

Meanwhile, others like Ben Waters, Head of Digital at IOST, remains cautiously optimistic while warning about retrofitting centralized points of failure into decentralized networks.

“Institutions like Fidelity and Nasdaq entering the space can be a good thing for crypto, as long as the exploitative financial systems (e.g. fractional reserve banking, commingling, etc.) are not piggybacked into the crypto space,” he said. “Historically, the legacy financial system has been used to exploit the general public — making the rich get richer and creating centralized points of failure.”

Akbar Thobhani

Akbar Thobhani, CEO of SFOX, a crypto prime dealer that just raised $22M to build an institutional crypto asset management platform, added:

Nasdaq and Fidelity’s recent announcements prove that cryptocurrency will not be going anywhere anytime soon…Fidelity Digital Asset Services’ focus on cryptocurrency custody and trading services for enterprise clients showcases the commitment and interest they’re seeing from their clients, but we’ll really hit a turning point when Fidelity offers cryptocurrency to their retail and 401K customers.

Meanwhile, Andy Bromberg, president of CoinList sees this as just the latest vote of confidence in digital assets.

“We expect these moves to further increase the confidence of regulators and help drive the law forward,” he added.

Finally, Rahul Sood, CEO of Unikrn, a leading voice in applied crypto at the merger of blockchain, esports, and wagering, thinks that traditional finance as a whole will follow to experience a boom similar to that of the Internet and e-business.

“Crypto is going to break the status quo in fintech, including securities. Fidelity and Nasdaq will not be alone. Soon, asset managers will look at blockchain the way banking looks at the Internet: do or die.”

What are your thoughts on Fidelity entering the crypto space? Share your thoughts below!


Images courtesy of Shutterstock, Twitter

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.

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