Business

Derek Tonin

New research shows how Tether whales manipulate the market

A new research study has revealed that an alarming amount of Tether (USDT) has been concentrated in the hands of a very small number of investors. Bloomberg reports 318 addresses hold $1 million or more of the stablecoin, making up for 80% of the world’s total supply.

The research was conducted by Massachusetts-based research firm Coin Metrics. They also analyzed the distribution of SegWitCoin (BTC), noting that 20,000 wallet addresses held more than $1 million worth of the crypto. That means that only 20% of the BTC market was concentrated in the hands of whales. All the same, the amount of super rich Tether holders can still have an out-sized importance on BTC prices.

University of Texas at Austin finance professor John Griffin said of the findings:

The concentration of Tether suggests that control of Tether is in the hands of a few central players who can swing Bitcoin prices, and have a vested interest in doing so […] It also suggests that many exchange players have a vested interest in keeping the Tether game going.

While it’s easy enough to assume that the distribution of BTC amongst thousands of investors protects it against manipulation, that’s not the case. One large buy or sell order from a single USDT holder could crash or pump markets very quickly, manipulating the price to suit their own needs.

Griffin has previously linked exactly this type of activity to the surge of the BTC market in 2017, and its subsequent crash in 2018.

While market manipulation is never fun, it’s made exponentially worse by all of the questions that surround USDT. Bitfinex, the parent company of Tether, has been accused or printing additional USDT that it cannot back with any real fiat holdings, which can then be used to cover up losses from hacking attacks, or like Griffin has suggested, to help pump the market.

The only real investment that can be counted on is to put money directly into Bitcoin SV (BSV) businesses. Companies that have solid business models and talented teams behind them, like Unwriter’s Planaria Corp, are creating the promise of long term returns on never thought of before business models. And they have promise that USDT and BTC can’t match, because they are building on the only blockchain that scales massively with real world utility, BSV.

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