The Abnormal Growth of Bitcoin on Bitfinex Has Raised Concerns About a Possible Collapse of Tether

At the same time on Monday morning, the price of Bitcoin showed rapid growth, approaching at one point close to $7,800 on the Bitfinex exchange, the Tether USDT rate fell by 6% against the US dollar, to which it is theoretically pegged at a ratio of 1:1.

At one point, the USDT price dropped to $0.92, and it happened almost at the same time as the Kucoin exchange reported that deposits were being suspended and the USDT was withdrawn due to system maintenance. At the time of publication, operations with USDT at Kucoin have been resumed, and the price of the token has gradually increased, rising to $0.966.

However, it was Bitcoin’s anomalous growth that focused most of its attention. It was observed mainly on the exchanges where the USDT is traded. At a certain point, the divergence rate on these exchanges and sites that do not use USDT was more than $1,000.

The well-known critic of the Hong Kong Exchange, Bitfinex’ed also suggests that the rise in Bitcoin prices on the exchanges without USDT trading is due to bots programmed to follow what is happening on Bitfinex. In his opinion, all these bots will be closed sooner or later.

Despite the fact that Bitfinex’ed’s position is not shared by all members of the community, today’s events have led many to ask a number of questions about what is really happening on this popular exchange.

Thus, cryptocurrency analyst Alex Krüger noticed that the spread in prices on the exchanges affected not only Bitcoin but also Ethereum, the second most capitalized cryptocurrency. At one point this morning, ETH traded on Bitfinex at 10% more than at Coinbase.

According to Krüger, all this suggests that the reason should be sought in the massive sales of USDT, caused by traders’ fears that the token may not have the necessary security in fiat. Accordingly, wanting to protect themselves from a possible asset spread, many of them decided to go into other cryptocurrencies, and this provoked such an explosive growth.

“Would be quite an irony if a Tether collapse would send bitcoin out of this bear market,” the analyst added.

In a commentary from Bloomberg, Luno’s head of business development, Vijay Ayyar, also suggested that the situation around Tether could lead to increased market volatility.

“If traders start to flee Tether, it’s a potentially precarious situation. It basically implies a lot of volatility ahead,” he said.

Meanwhile, another well-known analyst, Joseph Young, paints a very unfavorable picture for Bitfinex:

Known for his ironic and sharp statements investor Richard Heart wrote that when the exchanges die, the price of bitcoin usually goes up.

However, not everyone is ready to bury the exchange. For example, Timothy Tam, co-founder, and CEO of CoinFi research firm told Bloomberg that speculation around Bitfinex, while withdrawal of funds is still carried out normally, is more like “paranoia”.

“I believe this will all clear up relatively soon,” he said.

Bitfinex representatives didn’t respond to a request for comments regarding the situation, however, some time ago a message appeared in the exchange’s Twitter account that the exchange plans to launch a new system in the next 24 hours, which will allow it to resume accepting fiat deposits. Recall this opportunity was suspended last week.

The exchange also confirms that the withdrawal of funds both in fiat and in cryptocurrencies is carried out normally.