The volume of stablecoins has increased to an unprecedented level since the start of the year. Tether’s demand is more out of all as the company printed nearly 1.58 billion USDT worth $1.59 billion in April only.
There must be a reason why Tether is printing coins in billions in a hurry. The trading volume of stablecoins is touching record values and even crossing the daily trading volume of Bitcoin. Out of all, the volume of USDT coin is high, and that’s the reason why the company behind USDT, Tether, is minting coins at a large scale. In the first two weeks of April, 480 million USDT tokens minted by the company, which continued till April 30.
The minting of such a large amount of USDT coins raised many questions as many claim Tether is controlling the crypto markets. It is a popular belief that Tether’s minting of new coins triggers the Bitcoin price upward. For example, Tether printed 1.58 billion USDT in April, and the price of the leading digital asset also surged to $9,400 in April after losing half of its value in mid-March.
On April 30, the company issued more than 160 million USDT in 24-hours. During the same time period, the BTC price jumped from $8,000 to above $9,000.
New Study Rejects Correlation
The new study shows that there is no relation between the USDT’s minting and Bitcoin’s price. The two researchers- Ganesh Viswanath-Natraj from the Warwick Business School and Richard K Lyons from UC Berkeley- traced out the issuance of stablecoins including Tether over a period of three years. According to them:
“Our bottom line: We find no systematic evidence of stablecoin issuance driving cryptocurrency prices.”
The study claims the issuance of stablecoins work per the demand of the market.” Our evidence supports alternative views, namely, that stable-coin issuance endogenously responds to deviations of the secondary market rate from the pegged rate, and stable coins consistently perform a safe-haven role in the digital economy,” they added.