The founder and CEO of Avanti Financial explains this Tether’s recent disclosure of stablecoin reserves may have contributed to last week’s altcoin sell-offs.
In a series of tweets on Saturday, Caitlin Long He saidTo what The Tether Holdings Limited (USDT) reserve breakdown has not been invested in short-term liquid securities with lower risk, but rather in credit assets labeled “who knows what quality”. Avanti CEO stated that traders may have been forced to sell other cryptocurrencies to reduce their overall risk as stablecoin – which ranks sixth with a market cap of $ 58 billion. It has the potential to lower other tokens as part of a credit market correction.
“If Tether remains a de facto credit hedge fund by investing reserves in this way, Markets can now confidently predict that Bitcoin and cryptocurrency prices are likely to have a high correlation with the credit markets“, He saidAlong. “They’ll probably correct together.”
Long added that after the tether reserves are fully depleted, authorities may still be cracking down on stablecoins, but said they did The crypto industry could benefit from the clarity of the regulations::
“One of the best things for the industry right now would be getting stable coins in line with US regulators, especially the Fed and SEC. Stable coins are very important bridges between cryptocurrencies and the US dollar.”
According to the report by Tether Holdings Limited, 75.85% of USDT support is cash and equivalents, and commercial paper makes up 65.39% of that category. Long claimed that a possible downturn in markets “would have been completely avoidable” had Tether invested more in Treasury bills – only 2.94% of its total cash, cash equivalents, other short-term deposits and commercial paper. rather than assets with a seemingly higher risk.
The CEO’s comments follow the price of Bitcoin (BTC) falling below $ 46,000 on some exchanges;; The crypto asset is at $ 45,818 at press time after falling more than 20% in the past seven days. However, It is unclear what role Tether’s disclosure might have played in the cryptocurrency market. Binance was also in the spotlight when a Bloomberg report alleged the US Department of Justice and the Internal Revenue Service were investigating cryptocurrency exchanges for alleged “illegal activity”.
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