Tether Treasury Socks Away One-Third of USDT Supply

Tether Treasury Socks Away One-Third of USDT Supply

October 22, 2018

The Tether treasury wallet has again mopped up USDT tokens from the Bitfinex exchange.

The Tether treasury now holds about a third of the total supply of USDT after mopping up excess coins from Bitfinex over the weekend. The trend of retrieving USDT, effectively removing the coins from exchanges and circulation, began only at the end of September, prior to which the treasury was pouring in liquidity.

On October 19, an additional 50 million USDT left Bitfinex after 80 million units were taken away from the exchange on previous days. As a result, the treasury holds 916,678,763 USDT, while Bitfinex has been left with just 14,367,592 USDT. Over the weekend, the exchange saw its supply go as low as 9 million USDT, but traders keep depositing the coins. This cycle has continued for days, and the Tether company does not have to provide backing for the USDT retired to the treasury. Yet, there are still more than 2 billion tokens in circulation, holding sway over 98% of all stablecoin trading and leaving just a fraction for new arrivals such as TrueUSD (TUSD), Gemini Dollar, and USDC.

The Bitcoin (BTC) price premium on Bitfinex is around $195, based on data from Untether. No new BTC has yet left the Bitfinex cold wallet. Another indicator, the USDT/USD exchange rate, also tells a worrying story after a slight drop to $0.96 on Kraken.

While selling has abated in the past days, the USDT asset still cannot reach its dollar peg despite the Tether treasury creating artificial scarcity by locking away 30% of the total supply. Trading volumes slid across the entire crypto market, with Bitcoin clocking as low as $3.4 billion equivalent in 24 hours. Total trading volumes are around $10 billion, still higher than the $4 billion or so recorded in October 2017. Once again, more than 57% of all BTC trades are against the USDT.

In the meantime, Kraken has removed the direct withdrawal of US dollars for non-US citizens, just as more than 46 million USDT have been deposited to the exchange.

Users are reporting no way to directly withdraw to US dollars although there is no USDT-EUR market. An alternative route would be to use USDT on Kraken to buy Bitcoin, then sell it for euro and withdraw the fiat.

USDT trading currently makes up 21.84% of the entire crypto market, affecting altcoins as well. However, the biggest effect so far is to support BTC prices around the $6,600 level.


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