Bitcoin (BTC) at an 8% premium on Tether-based (USDT) exchanges

Tether collapses to 92 cents as Token Insight reports a ‘B’ grade investment rating for USDT

Volume rushed back into the crypto market this morning after Binance tweeted out a report from Token Insight giving Tether an investment grade rating of B (On the 10 point scale from AAA to D).

Awarding a ‘B’ investment grade rating implies a “project risk is limited to a controllable extent”.

The report concluded that “Tether is a centralised business entity and lacks sufficient transparency”. It went on to say that any reserves have “not been convincingly proven for a very long time”.

It highlighted that even though Tether had promised to publish regular audits they had not found a new auditor after its partnership with its previous auditor was terminated in Jan 2018.

The last Tether update?

The most recent update was in June 2018 when US Law firm Freeh, Sporkin & Sullivan LLP, issued a document to confirm that its fiat reserve was sufficient on 1st June 2018. This was just not good enough for a token with over $3 billion in supply plus a dominating market share above any other stable coins in the market – Closest competitor: Trust backed stable coin (TUSD) with $142 million market cap.

Premium for BTC

The news started a flurry of buying across Bitfinex/Binance exchanges and people rushed out of USDT and into cryptocurrencies like Bitcoin so they could immediately withdraw funds. Bitfinex have tweeted out a response to the recent ratings to say that all crypto withdrawals and deposits are functioning normally, with the only disruption with fiat deposits for “certain groups”.

The premium against the USDT pair was more than 8% with a peak of $1000 premium between Bitfinex and BitMEX. It took around 21,000 BTC and one hour to move the price to a high of $7800 on Bitfinex (around $150 million of Buy Volume).

USDT was trading as low as 92 cents after the news broke but the price has recovered since to 97 cents. It’s interesting to also see the other stable coins spike in price over 5% against the crypto market. In fact, the $20 million a day volume market for Tether vs the TUSD is currently trading with a 9% premium to tether  – equating to  1.09  Teather for each TUSD

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice. We do not give advice on financial products.

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