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The cryptocurrency market is hitting new all-time records
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The cryptocurrency market is hitting new all-time records

created Forex ClubSEPTEMBER 26, 2021

The cryptocurrency market saw the first American one last week bitcoin ETF based on futures, pushing up the quotes Bitcoin, Ethereum and the cryptocurrency market itself to historical highs. On the regulatory side, the emitter of the biggest stablecoin has once again found itself in the negative spotlight.


Mads EberhardtAbout the author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).


The cryptocurrency market is hitting new all-time records

In terms of prices, the cryptocurrency market saw a positive last week after the first was launched  bitcoin futures fund ProShares Bitcoin Strategy ETF (BITOUSD). ETF undoubtedly enjoyed considerable popularity among traders. Day one turnover reached almost $ 1,1 billion, making the ETF's second-best debut ever. Within two days, the ETF reached $ 1 billion. Ironically, the ETF that made the fastest turnover of $ 2004 billion in assets under management before the Bitcoin ETF was the first U.S. physical gold ETF called the SPDR Gold Shares ETF (GLDMUSD), which managed to hit $ 1 billion in XNUMX. three days. Breaking this multi-year gold-backed ETF record is quite significant and lends weight to the basic argument of bitcoin enthusiasts that Bitcoin is "Digital gold".

After the Bitcoin ETFs were traded last week, the bitcoin spot price soared to the point of hitting an all-time record of almost 67 (BTCUSD), breaking its previous all-time high of 000 set in April of this year. Total cryptocurrency market capitalization hit a record high of $ 64 trillion last week, which was also influenced by the rise in the second-largest cryptocurrency, Ethereum. After Ethereum hit a new all-time record of 900 (ETHUSD) last week, slightly above its previous record of 2,7 set on May 4, its price fell again. As of this writing, Bitcoin was trading at 375 while Ethereum was trading at 4.

Tether once again in the spotlight

The largest issuer of stablecoins in circulation based on the American currency, Tetherhas once again been placed in the spotlight. In short, Tether is essentially the first issuer of stablecoins that are closely correlated with a given fiat currency, most often the US dollar. In general, fiat money is held by the issuer in bank accounts or in other more risky securities such as short-term US Treasury bills, supporting the value of the stablecoins issued. At the time of writing, Tether had nearly $ 70 billion in issuance of its stablecoin called USDT, which is a considerable sum. In recent years, however, Tether has been criticized for its lack of transparency regarding the coverage of issued USDT tokens in the US dollar. This essentially raises the question of whether USDT actually has any backing in fiat or other low-risk securities.

US regulators have been keeping a close eye on Tether for several years. Two weeks ago, Tether was fined $ 41 million by a US commission CFTC (Commodity Futures Trading Commission) for allegedly "misleading" statements about its US dollar-backed reserves. The CFTC said these statements covered the period from June 1, 2016 to February 25, 2019, but it is unclear whether a similar situation is not also the case today.

Famous short selling research firm Hindenburg Research last week announced a reward of up to $ 1 million to anyone providing information on Tether reserves, amid the company's concerns about their legality. At the same time, Hindenburg Research assured that as of today, he did not have any long or short positions in Tether, Bitcoin or any other cryptocurrency. Tether called the award "a pitiful attempt to get attention."

The impact of the $ 128 billion stablecoin market and USDT alone on the cryptocurrency market should not be underestimated. As the most liquid cryptocurrencies are mainly traded in USDT, it has a huge impact on cryptocurrency trading. In the event that USDT does not have adequate coverage, the cryptocurrency ecosystem does not reflect true value, which buyers do not consider. This fact can be used to unfairly push up cryptocurrency prices, as long as there are volunteers on the other side of the transaction to receive stablecoins in exchange for their cryptocurrencies. If USDT does not have adequate coverage, which becomes obvious, it is likely to lead to USDT abandonment by traders to fiat currencies, while weakening regulators' confidence in the market, with significant consequences for the entire cryptocurrency market.

In September, the chairman of the American The Securities and Exchange Commission (SEC) Gary Gensler called stablecoins chips for the game of poker. With this in mind, we are likely to see further market regulation, not only in the US but around the world. However, these regulations do not have to be unfavorable; on the contrary, they can reduce the uncertainty associated with the coverage of stablecoins.

bitcoin chart October 26

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