On March 24, a tweet from crypto-tracking Twitter account Whale Alert indicated that the Tether Treasury had just minted $120 million new Tether (USDT) into circulation. Many individuals who support various digital currencies were excited by this announcement. It seems these supporters have the belief that after a new Tether mint, the digital currency markets are likely to pump.
Pump it pic.twitter.com/IGziafp7lY
— Whalellness (@whalellnes) March 24, 2020
But given the concern many have had in the past regarding Tether actually being fully backed, this event seems counter-intuitive to what is supposed to be the nature of Bitcoin. Bitcoin is supposed to serve as a hedge against inflation—not an asset that is fueled by stablecoin inflation. It also seems akin to the Federal Reserves’ decision to add to its balance sheet without limit, which will, unfortunately, decrease the value of the money being used to add these assets to its balance sheet—the U.S. dollar (USD).
But were $120 million new Tether actually just created out of thin air? Apparently, they were not.
What happened with Tether?
According to Paolo Ardoino, the CTO of Tether, there’s more to this $120 million Tether print than meets the eye. As a matter of fact, contrary to what seems to be popular belief, the $120 million USDT that has just been printed are not circulating in the market yet.
PSA: Inventory replenish.
Note this is a authorized but not issued transaction, meaning that this amount will be used as inventory for next period issuance requests.— Paolo Ardoino 🍐 (@paoloardoino) March 24, 2020
According to Ardoino, the new Tether that has been printed is sitting in inventory and will be distributed as issuance requests for Tether begin to roll in. An issuance request is when an entity looking for USDT pays the Tether Treasury the fiat for the Tether they are purchasing. Shortly after the $120 million USDT print, we saw several multi-million dollar transactions coming from the Tether Treasury and going to “unknown” wallet addresses.
🚨 14,000,000 #USDT (14,128,009 USD) transferred from Tether Treasury to unknown wallet
— Whale Alert (@whale_alert) March 24, 2020
🚨 12,250,000 #USDT (12,382,811 USD) transferred from Tether Treasury to unknown wallet
— Whale Alert (@whale_alert) March 24, 2020
🚨 15,000,000 #USDT (15,167,492 USD) transferred from Tether Treasury to unknown wallet
— Whale Alert (@whale_alert) March 25, 2020
What does this all mean?
Assuming that Ardoino is honest with us, the new USDT that have been printed are currently in inventory, and are being distributed as invoices for USDT roll in. But what does this mean for the digital current market at large?
Potentially, there is $120 million worth of USDT in the market somewhere. More likely than not, this USDT will be used to buy digital assets and will lead to more money entering the digital currency markets and increasing the total digital currency market cap in the future. With multi-million dollar transactions leaving the Tether Treasury’s wallet shortly after the $120 million print, we suggest you keep an eye on the wallet addresses that received Tether and look out for their next moves. If their newly minted USDT goes from their wallet to known exchange addresses, there is a good chance a market buy will take place. If the USDT stays parked in their wallets, maybe they are waiting for a better opportunity (better prices) to buy at.
Regardless, this feels like the calm before the storm.
New to blockchain? Check out CoinGeek’s Blockchain for Beginners section, the ultimate resource guide to learn more about blockchain technology.
