Forex and Crypto News

How Tether Reserves Affect Bitcoin Price

15:32 08 September /2020

Over the past three months, the market capitalization of stablecoins has increased by an average of $100 million per day. And Tether has become one of the leaders in capitalization growth. Thanks to its growth, Tether's trading volumes have significantly surpassed Bitcoin trading volumes.

However, over the same 3 months, the volume of Tether reserves has changed significantly on exchanges. These reserves were mainly used to transfer cryptocurrencies from crypto-to-crypto to crypto-fiat exchanges.

Cryptoquant has provided data on Tether reserves on Binance, OKEx.



It's also worth noting that Binance handles 41% of Tether's trading volume in the spot market. When USDT reserves are falling in such volumes on the exchange, it is more than a pure coincidence. USDT reserves have dropped on exchanges and these changes can be seen here.


The graph shows that on August 12, reserves decreased by more than $ 250 million, at the same time the capitalization of Bitcoin began to increase. And on August 20, the volume of Tether's reserves amounted to $1 billion. At the same time, Bitcoin's capitalization began to fall. This is not the first time Tether has had such an impact on Bitcoin's market cap.


Over the past year, Tether has generated sustained interest from traders. Traders see Tether as a refuge of value with low volatility and predictable market cycles. With Tether, you can react to the Bitcoin price trend.

Bitcoin's price and market capitalization are dependent on liquidity on spot exchanges. When Tether reserves increase on exchanges, there may be enough liquidity to trigger a sudden crash in Bitcoin prices. Its recovery will depend on trading volume, with Tether dominating 24-hour trading volume on exchanges.

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