Last month has been one wild ride for Tether (USDT). Tether has seen massive influxes of USDT to its Treasury. This is due to the cryptocurrency losing “parity” with the USD. The entire cause of the loss of parity were doubts about Tether’s ability to access banking services and the lack of USD/USDT conversion. Last week, Tether shared another big announcement, that the company had destroyed 500 million USDT tokens. Now this is by no means a first time event, because Token destruction has been used by a few companies and it’s slowly gaining popularity. It’s an efficient way to combat token inflation and increase the value of the remaining tokens. You can read more in the link below. The destroyed tokens were previously held in the Tether Treasury. The biggest influx to the Treasury came after 14th of October when USDT began slipping below $1.00. By October 23rd, nearly 680 million USDT were transferred to the Treasury.
Tether destroyed 500 million USDT Tokens
Here’s where things start to get interesting: All 100% of those transfers came from an address controlled by Bitfinex. Bitfinex is a crypto exchange that has ties to Tether in terms of management and ownership. The exchange’s cold’ wallet also had fallen by 100 000 bitcoins since the beginning of September. This has led many people to speculate about the exchange’s intentions. The general belief is that the exchange has been spending Bitcoin in order to remove Tether from the market. This move can only be explained with the desire to push back the exchange rate towards it’s normal $1.00 mark. Others believe that this push is entirely dedicated to taking Tether off the market for good.
However, the result speaks for itself. Due to the large amount of transfers, the supply of USDT in circulation has dropped by roughly 25%. There are currently about $2 billion in circulation. With the 500 million USDT tokens that were destroyed by the company, things are beginning to look better for the stablecoin. The company stated that there are around 466 million USDT still left in the Treasury account. The announcement also characterizes the many transfers to the treasury as “Redemption.” This process was vaguely described in the white paper back in 2016. However, according to the biggest anti-Tether activist “Bitfinex’ed”, Redemption hasn’t been anything remotely resembling its name. He also states that:
“Not a single person has come forward and said they successfully converted Tethers to USD and had a payment from Tether wired to them.”
Still, Tether recovered from the downturn and is looking as stable as ever. Despite all the scandals with Tether, the USDT token still remains a great hedging tool for the Cryptocurrency Bears market.
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