Analysts Suggest Tether FUD Could Signal Bottom for #bitcoin In the latest development affecting the cryptocurrency market, concerns surrounding Tether's stablecoin, USDT, have once again surfaced. Experienced participants in the Bitcoin and crypto space are familiar with rumors questioning the backing of USDT, which tend to arise during bear markets. This time, the Tether FUD (fear, uncertainty, and doubt) has made a comeback, adding to the turmoil in the Bitcoin market.
Reports indicate that USDT has slightly deviated from its peg to the US dollar due to the imbalance in the Curve 3Pool. Whales have been selling USDT and converting it into USDC and DAI. However, Tether's Chief Technical Officer, Paolo Arduino, has assured that the company is prepared to redeem USDT 1:1 against US dollars.
It is worth noting that the de-pegging of USDT has occurred before. Samson Mow, CEO of JAN3, a Bitcoin-focused company, commented on the situation, stating, "Tether FUD is always the FUD bottom. It's what they pull out when there's nothing left. Up soon." Analyst Miles Deutscher shares a similar perspective and suggests that stablecoin FUD often signals local market bottoms.
Examining a chart shared by Deutscher, it becomes evident that previous instances of Tether FUD coincided with local bottoms in the Bitcoin price. For example, in June 2022, Tether faced scrutiny when hedge fund Fir Tree Capital Management shorted the stablecoin following the collapse of Terra USD. Despite the temporary drop in USDT's value to $0.9520, Tether successfully processed all redemptions.
Similarly, in November 2022, the bankruptcy of cryptocurrency exchange FTX triggered heightened Tether FUD, causing USDT's price to fall to $0.9970. Nonetheless, Tether managed to handle redemption requests, marking a local bottom in the market.
Most recently, in March of this year, the depegging of USDC served as a signal for a local bottom. The incident occurred when the counterparty of stablecoin issuer Circle, Silicon Valley Bank (SVB), collapsed. During this period, crypto whales sought to capitalize on the situation, while panic-selling ensued among USDC holders.
Tether emerged victorious from the aforementioned scenario and gained significant market share from USDC. Tether's reported profits, which they have been investing in Bitcoin, have further solidified their position. Crypto expert Thor Hartvigsen asserts that Tether's probability of lacking funds to fulfill USDT redemptions is "pretty low." He highlights Tether's substantial profits, reserve surplus, reduced bank deposits, and acquisition of US treasuries as evidence supporting this claim.
Significantly, the price of USDT has already returned to its default level, showcasing resilience amid the ongoing Tether FUD. Meanwhile, Bitcoin is currently trading just above $25,000, and attention is drawn to its position relative to the 200-day EMA (blue line), known as the "bull line." A breach of this indicator during the USDC depegging led to a downturn. Bitcoin bulls are thus urged to respond similarly to the situation in March to prevent further price declines.
In conclusion, the reemergence of Tether FUD has impacted the Bitcoin market, raising concerns among investors. However, historical trends suggest that stablecoin FUD often coincides with local market bottoms, offering a glimmer of hope for Bitcoin's future performance.