March was a black month for the crypto market. Corresponding to half the price of Bitcoin was a significant premium in USDT and an "unlimited" additional offering.
According to Whale Alert data, since March 12, Tether has issued at least 18 additional USDTs, of which the number of single additional issuances is mainly 60 million USDTs.
The sharp shrinkage of the crypto market has also brought about the carnival of USDT, and the additional issue of Tether is essentially no different from the Fed's release of water.
The start of 2020 is set against the backdrop of the global economic smash hit by the new crown epidemic.
In the crypto market, the total market value of cryptocurrencies fell below 130 billion U.S. dollars, shrinking by nearly 49%. In the traditional financial markets, the stock markets of more than 10 countries triggered a meltdown, and US stocks intensively melted 4 times this month.
The epidemic is difficult to control, and the US authorities have once again opened up economic means to rescue the market.
On March 23, the Federal Reserve announced a series of measures to support economic development, including unlimited purchase of national debt and MBS on demand; permitting the issuance of asset-backed bonds supported by student loans, car loans, credit card loans, and small business loans; providing up to $ 300 billion in funding to support credit flows to employers, consumers, businesses, and more.
The Fed's move is described as "Infinite QE", which increases the supply of US dollars in the market through unlimited banknote printing capabilities, stimulates consumption and investment, and gets rid of the liquidity dilemma.
This water release model is not without effect. Since March 24, the stock market has continued to rebound. However, the market is still worried about the possible consequences of unlimited QE, and many people use "flooding floods" to describe the consequences of substantial quantitative easing.
"The Fed directly end up doing sports to sell credit risk for athletes. It is easy to collect water when it is released," people in the currency industry said.
In fact, no-cost dollar coinage basically means that global wealth is diluted, because the dollar can be converted into any asset, and the generation of the dollar is based on a switch in the hands of the Federal Reserve. The global economic bubble relied on sovereign credit endorsements to survive.
Tether issues additional USDT
Tether is like the Federal Reserve in the crypto world.
In the context of the collective cliff-like decline of crypto assets, Tether frequently issued USDT in March, which can be described as "outrageous".
Beep News has made incomplete statistics on the monitoring data on Whale Alert. Since March 12, in half a month or so, the number of USDT issuances has reached at least 18, with an average of 1.1 additional issuances per day.
USDT issuance incomplete statistics based on Whale Alert monitoring data
Combined with DappTotal data, since March 12, the USDT issuance volume (including ERC20-USDT and TRC20-USDT) has reached 1.184 billion. In the past half month, the amount of USDT issuance has accounted for nearly 20% of the total amount of USDT issued on the four chains of Ethereum, Tron, Bitcoin, and EOS .
In addition to the increase in the frequency and volume of issuance, USDT's single issuance is also strengthening. On March 24 and March 25, Tether issued 120 million USDTs to the Ethereum network, which is twice the normal operation of 60 million USDTs.
Tether is like a full-powered money printing machine, quickly transporting USDT to the crypto market, and this time, the market no longer seems to question whether there is sufficient USD support behind USDT, because regardless of investors, project parties, transactions So, or other participants, are busy solving the USDT liquidity problem.
From March 12th to 13th, the price of bitcoin was almost halved, and in correspondence with it, USDT continued to show a high premium. According to the Planet Daily report, on March 12, in the Huobi OTC trading area, the USDT over-the-counter quote was more than 8 yuan, and the USDT premium was as high as 14.29%.
Under extreme market conditions, investors who do not plan to withdraw money for the time being convert bitcoin to USDT to resist the downside risk caused by currency price fluctuations; previous waiters took the opportunity to dip in bottoms and required USDT to deposit funds; contract players urgently needed USDT supplementary margin in order to avoid being out of stock ; The USDT's sharp premium has allowed arbitrageurs to see arbitrage opportunities … all these have led to a surge in market demand for USDT.
A large amount of USDT is occupied and there is a lack of liquid USDT in the market, so Tether's additional issue has become a matter of conformity. Like the Fed's water-discharge mode, Tether opened the "unlimited banknote printing" valve.
Until yesterday, Tether was still trying to issue additional shares.
Whale Alert monitoring data showed that Tether issued 120 million USDT to the Ethereum network yesterday. Paolo Ardoino, chief technology officer of Tether's sister company Bitfinex, said "This is an authorized but unissued transaction, and the amount will be used for the inventory of the next issuance request." This is not the first time Tether has "printed money in advance."
The crypto crash brought huge benefits to Tether. Thanks to the premium and additional offerings, the USDT market capitalization ranking rose to fourth place this month. According to the block rhythm information, the market value of USDT increased by more than 1 billion US dollars in two weeks.
Similar to the devaluation of global wealth caused by the printing of the Federal Reserve, the additional issuance of USDT will also cause the devaluation of other crypto assets. Faced with the possible consequences of the flooding of the Golden Mountain, the Federal Reserve recovered its currency in the market by reducing its balance sheet and reducing investment, while Tether redeemed and destroyed USDT.
Tether has two machines on hand, an "infinite ability" banknote printer and an "infinite ability" pump. It's just that the Federal Reserve does not need gold to support banknote printing, and Tether claims that each USDT is backed by a corresponding amount of US dollars and other assets. This statement has not been falsified and has not been confirmed.
Centralized banknote printer in the crypto world
Tether, the issuer behind USDT, has been controversial. The Wall Street Journal once quoted that Tether was the "central bank" in the crypto trading market, but at the same time, Tether did not behave like a credible financial institution.
Wikipedia information shows that Tether does not recognize the legal rights of USDT holders and does not guarantee that USDT can be redeemed and converted into U.S. dollars.
Tether previously announced that every USDT is anchored in 1 USD fiat currency. On April 30, 2019, this statement was modified to have USD 0.74 in cash and cash equivalents behind each USDT. Even so, Tether also It has been unable to provide relevant evidence to prove that there is sufficient reserve support behind USDT.
In addition, Tether is a centralized organization. The information in the white paper indicates that Tether Limited, the issuer of USDT, is wholly-owned by Tether Holdings Limited, a British Virgin Islands company.
The denomination of the ideal crypto world, Tether, the issuer of the exchange base USDT, is a centralized institution, and it is controlling the issuance and destruction of USDT in a way that the crypto community cannot prove reliable. This fact is ironic.
More importantly, if there is really no sufficient legal asset support behind USDT, the entire crypto market will be placed on a bubble, which will be the largest systemic risk in the crypto world.
What gives Tether so much power? First, the stablecoin is the main access channel for the fiat currency world and the cryptocurrency world. Second, USDT has an overwhelming advantage in the stablecoin market. As of writing, USDT's market value accounted for 80.1% of all stablecoins .