If there’s one cryptocurrency which has been most controversial of all popular coins out there, it’s Tether. Not only it has been blamed for operating on a fractional reserve but also it has been blamed of indulging in market manipulation. It has often been seen that issuance of fresh Tether tokens leads to a spike in the price of Bitcoin, and many of Tether’s critics have said that Tether does it intentionally and as per its own interests. Recently Kraken CEO Jesse Powell spoke over these same topics of debate in an interview to TD Ameritrade. And here we’re going to tell you what he said. Let’s see:
Tether more transparent version of Exchange activity
When asked if Powell sees any real correlation between prices of Tether and Bitcoin, he said that this correlation is also visible to exchanges behind the scenes in a different manner. Whenever Tether supply is increased, the flow of funds into bank accounts of Exchanges is also increased. He said:
“I don’t have inside knowledge of what’s happening at Tether, but I can tell you that, historically, when you’ve seen growth in the supply of Tether, we’ve seen growth in the supply of U.S. dollars coming onto Kraken. And other exchanges would report the same.
Due to this reason, he added, Tether is actually a much more transparent version of exchange activity than anything else. Because whenever Bitcoin price is increasing and media creating hype around it, the flow of funds from retail investors remains publicly visible to everyone in case of Tether through its blockchain. Same thing, however, doesn’t happen with funds in fiat currencies. He also added that Tether prints may actually be a result of more fiat money coming in, rather than a result of Tether management’s market manipulation plans. He said:
“Recently, we’ve had massive inflows of fiat currency, so I believe the Tether prints are a result of new fiat coming in.”
Tether much smaller than people think; Bitcoin price driven by real demand
Speaking further on the same subject Powell added that Tether is actually much smaller than people think it is. Its share in trade of Bitcoins is significantly less than the share of trade that happens with fiat currencies. So the movements in price of Bitcoin, according to him, are driven by inflow of more funds from retail investors and represents real demand instead of market manipulation by Tether. Here’s how he summarized these points:
“I don’t feel like Tether is artificially inflating the price of bitcoin. I think Tether is actually a small part of the total fiat supply among all the exchanges. There are days when you see the price going up ten percent a day. You can bet all the exchanges are onboarding fifty to a hundred thousand new users a day [when that happens]. That is what is driving up the price. It’s huge retail demand and all the media attention on it. It’s not Tether.”
There seems quite some serious amount of logic in what Jesse has said, and since he is the CEO of a major transparent cryptocurrency exchange, his words carry a lot of credibility. And what these words suggest is a vibrant future for cryptocurrencies in the coming days.