Bitcoin And The Tether Liquidity Risk

The market capitalization of Bitcoin hit $1 Trillion and sceptics such as Nouriel Roubini have so far been made to eat humble pie, Today Bitcoin is trading at $56,000 and if you had invested $1000 back in 2010 it would be worth a staggering $560 million today. At Businesseconomics.com we have always looked at Bitcoin as a tradeable asset. much like rare stamps -- if people are happy to trade them amongst themselves then they have value. However, we have become increasingly concerned about the relationship between the so called stable coin Tether and whether it is actually being created out of thin air and is really backed by the equivalent in dollar reserves, this point has been extensively examined on other websites . 

Furthermore I am not too sure I would want billion of reserves being with a bank managed by Deputy CEO Gregory Pepin -- he looks like he enjoys doing gaming during his spare time. I would like to see a psychologist comment on his body language. Even if Tether is not being created out of thin air it seems that  someone did actually create  $5 billion worth that got called back; that alone is a warning sign. We are also concerned that the daily value of trading in Tether of over $100 billion is now substantially more than the supposed market capitalization of of Tether of $33.5 billion. This means each Tether is being traded no less than 3 times per day on average. This all sounds great for liquidity but if the whole crypto market depends on Tethers then this creates a systematic risk to the whole crypto currency market. However a concern which we would like to highlight is the liquidity risk associated with Tether, you only have to go to their website to see this.

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