Bitcoin pops up to $7,250 as Tether roils
Turns out there are a heck of a lot of Tethers out there.
The cryptocurrency markets have bounced sharply, with the total market cap rising by an odd $20 billion in the last couple of hours and trade volume noticeably surging at the same time.
Bitcoin was one of the key recipients of this bounce, popping up as high as $7,250 before falling back.
The cause of today's turbulence might be Tether, which has seen some remarkable swings today, successfully dropping as low as $0.92 at one point, according to CoinMarketCap (above), as markets have a resurging crisis of faith around Tether's backing.
According to LiveCoinWatch (below), it's since pivoted and swung above a dollar, and is now trading at $1.05 on Binance, Okex and others.
But according to CoinMarketCap, Tether is, at the time of writing, well and truly in the 95 to 97 cent range in most markets. This suggests that a lot of people woke up and looked at Tether prices, and that those who didn't have a heart attack went on to sell.
Or, if Tether is suddenly trading at a premium as per LiveCoinWatch, it might be that people are locking in their gains after the flash price rise and flipping back to Tether, even at a 5% premium, in anticipation of a sudden drop.
This suggests that it's just a very brief flash surge, followed by some quick profit-taking from quick hands.
In the absence of any other cause, the sudden surge around the crypto markets is most likely tied to Tether's big day out. It might be that as people ditched their Tether for whatever they could, they pushed the rest of the market upwards.
As is fashion, the rise may have started with bitcoin and then moved to the altcoins. As is not necessarily fashion, bitcoin is one of the main beneficiaries of this rise, popping past $7,000 with little effort and briefly clipping the $7,250 mark before gravity started dragging it back down.
At the time of writing, the selling is back in full swing, which might explain the current Tether premium.
It's been a wonderfully messed up day of trading for other stablecoins too. Dai has been shifting about 5 cents above and below its peg, but TUSD hit a new personal best at a frankly obscene $1.22.
It's all very weird.
In a nutshell, what seems to have happened is:
- People freaked out over Tether.
- Everyone ditched their Tether any way they could, pushing the rest of the market upwards.
- Everyone sold their newly-pumped crypto for a quick profit.
The entire thing took an hour or two. It just goes to show that there's a fine line between chasing a rise and FOMOing into a bad deal, and that traders don't have time to doubt Tether's backing when there are profits to be made from everyone else's fears.
Disclosure: At the time of writing the author holds ETH, IOTA, ICX, VET, XLM, BTC, ADA