Blockchain

The Bitcoin price has surged to a 2-month high of $29,450 today, reflecting a 3.3% increase within the last 24 hours. While several factors could have contributed to this rally, four principal drivers appear to dominate discussions.

#1 Expectations Of A Spot Bitcoin ETF Approval

There’s palpable excitement within the community as rumors intensify about the US Securities and Exchange Commission (SEC) potentially approving the first-ever spot Bitcoin ETFs. Currently, the SEC is actively engaging with prominent applicants including Grayscale, BlackRock, Fidelity, Invesco, and Ark Invest, among others. This has never happened before in the long history of Spot Bitcoin ETF rejections. It appears that the market may be starting to cautiously price in aka “front-run” the approval of a spot ETF.

Just yesterday, BlackRock filed its updated ETF application, adding more fuel to the fire. As James Seyffart, a Bloomberg ETF expert, elucidated, “BlackRock filed an updated Bitcoin ETF prospectus early this morning which is likely their response to SEC comments like we’ve seen from Ark, Fidelity, and others. Just more confirmation that issuers are in talks with the SEC.”

Forecasts surrounding this potential approval are overwhelmingly bullish. Macro analyst Alex Kruger predicts a 20%+ price surge on the day of approval, while trader Christopher Inks sets his sights between $38,000 to $40,000.

A recent CryptoQuant report posits that Bitcoin spot ETFs could swell the market cap by as much as $1 trillion, stating, “If $150 billion in fresh capital enters the Bitcoin market, it could increase BTC’s market cap by $450 billion to $900 billion.” Meanwhile, Matrixport’s research predicts a Bitcoin price range between $42,000 and $56,000 post-SEC’s approval of Blackrock’s ETF.

#2 Jerome Powell’s Latest Speech

In recent comments that have undoubtedly affected the crypto markets, Federal Reserve Chair Jerome Powell indicated the possibility of the central bank suspending its historic run of interest-rate hikes as long as there’s steady progress on inflation and rate hikes might be put on hold. Powell emphasized the importance of the 2% inflation target and addressed the balance between avoiding a potential recession and keeping inflation in check.

While raising rates too high risks a major recession, not raising rates high enough risks another inflationary breakout. According to current market forecasts, the Fed will therefore not raise interest rates at the next FOMC meeting from October 31 to November 1 and will continue to monitor inflation data. This stance from the Fed likely provided a bullish nudge to Bitcoin and the larger crypto market.

#3 Bitcoin’s Correlation to Gold

Yesterday, the price of gold rose again by 1.3%, and since October 6, even by a whopping 10%. As NewsBTC reported yesterday, the gold price could be a leading indicator of the gold price. When gold rises, Bitcoin follows as a hedge against the chaos in the US government bond market and global crises and wars.

Accordingly, Charles Edwards, founder of Capriole Investments, remarked via X (formerly Twitter) stating “The market is starting to price in the Fed’s overtightening and weakening economics.

Combined with geopolitical tensions plus war, the need for QE in the future is increasing rapidly. This is causing insurance assets (Gold, Bitcoin) to absolutely rip in unison. When both of these assets move together like this, it’s often the start of something very big.”

#4 Shorts Getting Liquidated

According to data from Coinglass, roughly $21 million in Bitcoin shorts were liquidated in the recent move up. Thus, the futures market has played a role in this price move.

Renowned crypto trader CrypNuevo stated via X, “All our liquidation levels to the upside from yesterday have been hit… Asia pumped and 12h liquidation chart is showing liquidations at the same level.” He also cautioned, “Current long-short open positions ratio is very high atm (+4 times more longs than shorts).”

At press time, BTC saw a slight retracement and was trading at $29,233.

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XRP price is gaining pace above the $0.50 resistance against the US Dollar. The SEC’s case against Ripple’s executives was dropped, sparking bullish moves.

The price started a strong increase above the $0.50 resistance.
The price is now trading above $0.505 and the 100 simple moving average (4 hours).
There was a break above a major bearish trend line with resistance near $0.4885 on the 4-hour chart of the XRP/USD pair (data source from Kraken).
The pair might correct lower, but the bulls could remain active near $0.50.

XRP Price Jumps 10%

After forming a base above the $0.480 level, XRP started a fresh increase. Recently, the SEC dropped its case against Ripple’s executives. It sparked a sharp increase in XRP above the $0.50 resistance.

There was a break above a major bearish trend line with resistance near $0.4885 on the 4-hour chart of the XRP/USD pair. The pair even broke the 50% Fib retracement level of the key decline from the $0.5510 swing high to the $0.4730 low.

XRP price is now trading above $0.505 and the 100 simple moving average (4 hours). It is also helping Bitcoin, Ethereum, Solana, and other cryptocurrencies in moving higher.

On the upside, immediate resistance is near the $0.524 level or the 61.8% Fib retracement level of the key decline from the $0.5510 swing high to the $0.4730 low. The first major resistance is near the $0.532 level. A close above the $0.532 level could send the price toward the $0.550 resistance.

Source: XRPUSD on TradingView.com

If the bulls remain in action above the $0.550 resistance level, there could be a drift toward the $0.565 resistance. Any more gains might send XRP toward the $0.585 resistance.

Are Dips Limited?

If XRP fails to clear the $0.524 resistance zone, it could start a downside correction. Initial support on the downside is near the $0.512 zone.

The next major support is at $0.505. If there is a downside break and a close below the $0.505 level, the price might accelerate lower. In the stated case, the price could retest the $0.4850 support zone.

Technical Indicators

4-Hours MACD – The MACD for XRP/USD is now losing pace in the bullish zone.

4-Hours RSI (Relative Strength Index) – The RSI for XRP/USD is now above the 50 level.

Major Support Levels – $0.512, $0.505, and $0.485.

Major Resistance Levels – $0.524, $0.532, and $0.550.

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Ethereum price managed to stay above the $1,520 support against the US dollar. ETH is rising and might rally if it clears the $1,605 resistance.

Ethereum averted more losses below the $1,520 support zone.
The price is trading above $1,560 and the 100-hourly Simple Moving Average.
There was a break above a major bearish trend line with resistance near $1,562 on the hourly chart of ETH/USD (data feed via Kraken).
The pair is moving higher toward the breakout zone at $1,605.

Ethereum Price Starts Recovery

Ethereum managed to stay above the main breakdown support at $1,520. The recent rise in XRP is sparking a recovery wave in the crypto market. ETH managed to start an increase above the $1,550 and $1,565 resistance levels, like Bitcoin.

There was a break above a major bearish trend line with resistance near $1,562 on the hourly chart of ETH/USD. The pair climbed above the 23.6% Fib retracement level of the downward move from the $1,669 swing high to the $1,542 low.

Ethereum is now trading above $1,565 and the 100-hourly Simple Moving Average. On the upside, the price is facing resistance near the $1,600 level.

The first major resistance is near the $1,605 zone or the 50% Fib retracement level of the downward move from the $1,669 swing high to the $1,542 low. The next key resistance is $1,620. A close above the $1,605 and $1,620 resistance levels might start a steady increase.

Source: ETHUSD on TradingView.com

In the stated case, Ether could start a recovery wave toward the $1,665 resistance. Any more gains might open the doors for a move toward $1,750.

Another Decline in ETH?

If Ethereum fails to clear the $1,605 resistance, it could start another decline. Initial support on the downside is near the $1,575 level and the 100-hourly Simple Moving Average.

The next key support is $1,540. The main support is still near $1,520. A downside break below the $1,520 support might send the price further lower. In the stated case, the price could drop toward the $1,440 level. Any more losses may perhaps send Ether toward the $1,350 level in the medium term.

Technical Indicators

Hourly MACD – The MACD for ETH/USD is gaining momentum in the bullish zone.

Hourly RSI – The RSI for ETH/USD is now above the 50 level.

Major Support Level – $1,575

Major Resistance Level – $1,605

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Bitcoin price is attempting a fresh increase above $28,500. BTC is eyeing another upside break toward the $30,000 resistance in the near term.

Bitcoin found support near $28,150 and started a fresh increase.
The price is trading above $28,500 and the 100 hourly Simple moving average.
There is a key rising channel forming with resistance near $29,000 on the hourly chart of the BTC/USD pair (data feed from Kraken).
The pair could continue to rise if there is a close above the $29,000 resistance.

Bitcoin Price Eyes Upside Break

Bitcoin price struggled below the $29,000 level. BTC even traded below the $28,250 level before the bulls appeared. The price found support near the $28,150 zone and recently started a fresh increase.

There was a move above the $28,400 and $28,500 resistance levels. The price cleared the 61.8% Fib retracement level of the downward move from the $28,980 swing high to the $28,150 low. There is also a key rising channel forming with resistance near $29,000 on the hourly chart of the BTC/USD pair.

Bitcoin is now trading above $28,500 and the 100 hourly Simple moving average. It is slowly gaining pace and consolidating near the 76.4% Fib retracement level of the downward move from the $28,980 swing high to the $28,150 low.

Source: BTCUSD on TradingView.com

On the upside, immediate resistance is near the $28,950 level. The next key resistance could be near $29,000 and the channel region. A close above the $29,000 resistance zone could set the pace for a larger increase. The next key resistance could be $29,500. Any more gains might send BTC toward the $30,000 level, above which the bulls might aim for $31,200.

Another Decline In BTC?

If Bitcoin fails to rise above the $29,000 resistance zone, it could start another decline. Immediate support on the downside is near the $28,650 level.

The next major support is near the $28,350 level and the 100 hourly Simple moving average. The main support is now forming near $28,150. A downside break and close below the $28,150 support might trigger more losses in the near term. The next support sits at $27,650, below which it could test $28,120.

Technical indicators:

Hourly MACD – The MACD is now gaining pace in the bullish zone.

Hourly RSI (Relative Strength Index) – The RSI for BTC/USD is now above the 50 level.

Major Support Levels – $28,650, followed by $28,150.

Major Resistance Levels – $28,950, $29,000, and $30,000.

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The total amount of Ethereum (ETH) staked on Lido Finance, one of the many liquidity staking protocols available, has risen steadily over the past few years. Surprisingly, revenue accrued by the platform (compared to staking rewards distributed) remains comparatively low. 

Lido Finance Revenue Isn’t Growing As Fast As Expected

Looking at Token Terminal data shared on October 19, the blockchain analytic platform observed that while staking rewards paid, counted as “fees” by Lido Finance grew from less than $10 million in early 2021 to over $60 million in June 2023, revenue has grown at a much slower pace. To illustrate, Lido Finance’s average revenue is roughly less than $5 million during this period.

Overall, Lido Finance is a liquidity staking protocol that supports the staking of multiple proof-of-stake (PoS) coins like Ethereum (ETH) without necessarily locking them up. Users can concurrently earn staking rewards while accessing their hard-earned ETH–or any other coin supported.

The protocol issues another derivative, stETH, for every ETH staked to achieve this. This token can be freely traded on exchanges. It can even be used as collateral for users keen on taking trustless loans on supported platforms.

Ethereum recently shifted to be a proof-of-stake blockchain to be greener and conserve the environment. This transition was a boon for protocols that supported the first smart contract platform to confirm transactions and remain secure, especially after the activation of Shanghai in April 2023. 

The Shanghai upgrade allowed Ethereum validators to withdraw their staked ETH for the first time, permitting them to use alternatives, of which Lido Finance, looking at total value locked (TVL), was preferred. As of October 19, Lido Finance had a TVL of $13.913 billion, most of it being assets on Ethereum. 

Ethereum Centralization Concerns: How Will This Be Addressed?

Lido Finance makes staking more accessible to everyone while concurrently enhancing liquidity. However, the revenue generated appears low versus the amount of staking rewards distributed to stakers, most of whom are from Ethereum. Part of the revenue the network generates is also distributed to LDO holders and node operators. Whether the liquidity staking protocol plans to increase the 10% fee charged to increase revenue earned remains to be seen.

Presently, there are concerns that Lido Finance’s role on Ethereum could lead to centralization. Ethereum has been accused of being “centralized,” mainly in how it is built. Critics assert that the reliance on its co-founder, Vitalik Buterin, for endorsement and guidance could slow down development in the future.

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As Bitcoin teases the psychological barrier of $30,000, enthusiasts and analysts appear to be closely watching every price movement. The general sentiment so far seems to be not a question of ‘if’ but ‘when’ BTC will make its way past this significant mark.

Glassnode founder, aptly named “Negentropic”, recently shed some light on Bitcoin’s current price action via a post on X (formerly known as Twitter). The analyst observed that the top cryptocurrency remains comfortably perched above the 100-hourly SMA, consistently maintaining its price above the $28,000 range.

Bitcoin Potential Upward Trajectory

Diving deeper into the specifics, Negentropic pinpointed an immediate resistance for Bitcoin at $28,550. This is the threshold that the analyst believes could act as a catalyst for further price movements.

According to Negentropic, if Bitcoin breaches this resistance and pushes past the $29,500 mark, it’s almost certain that the top crypto will set its sights on the coveted $30,000 level. Going by the momentum, it’s not unrealistic to even anticipate a peak of around $30,650, the analyst concluded.

Are bulls taking control as they rally around the $28k zone?

Main takeaways:
• Current price > $28k & above the 100 hourly SMA
• Immediate resistance at $28.55k
• Break past $29.5k could lead to $30k target
• Potential to reach beyond $30.65k with continued momentum… pic.twitter.com/Al8q2xGg5V

— 𝗡𝗲𝗴𝗲𝗻𝘁𝗿𝗼𝗽𝗶𝗰 (@Negentropic_) October 19, 2023

However, price isn’t the only metric painting a bullish picture for Bitcoin. In another post on X that sparked considerable interest, on-chain analytics firm Santiment disclosed that the number of Bitcoin wallets holding a minimum of 100 BTC has surged significantly, reaching 15,970.

#Bitcoin‘s number of wallets holding at least 100 $BTC has jumped to 15,970 after the largest single day jump of 2023 on Saturday. Since this accumulation, $BTC‘s price is +5.3%, and they may not be done. We will continue to monitor. https://t.co/l0drhvkf7E pic.twitter.com/0mDAmys7N4

— Santiment (@santimentfeed) October 18, 2023

His statistic often signifies increased confidence among larger investors, suggesting that the ecosystem’s key players are anticipating a continued upward trajectory for BTC.

BTC Latest Price Action

Recently, Bitcoin’s price has exhibited a bullish trend. Over the past week, the asset has surged by 7.5%. This uptick has propelled BTC to trade above the $28,500 threshold, currently priced at $28,698, marking a 1.2% increase in the last 24 hours.

From the analysis provided by Negentropic, BTC seems to have decisively breached its resistance at $28,550. This break could signify an imminent upward rally, based on insights from the Glassnode founder.

Another expert, Ali Martinez, recently pointed out the significance of the $25,000 and $30,000 price ranges in BTC’s trajectory. According to Martinez, these are “crucial demand bucket(s) in BTC history,” marking the entry points of institutional giants like MicroStrategy and Tesla into the Bitcoin arena.

Most people, especially institutional investors like @saylor @MicroStrategy & @elonmusk @Tesla, bought #Bitcoin between $25K & $30K, making this a crucial demand bucket in $BTC history.

So when they tell you “It’s too late to buy #BTC” or “Wait for $20K,” please ignore them! pic.twitter.com/B6rGtYidY6

— Ali (@ali_charts) October 18, 2023

Featured image from Unsplash, Chart from TradingView

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ARK Invest CEO Cathie Wood is no stranger to Bitcoin predictions given that the asset manager has previously said that BTC will go to $500,000 and even reach $1 million. As always, Wood remains steadfast in her Bitcoin predictions, coming out once more with an even more daring figure for the pioneer cryptocurrency.

Cathie Wood Says Bitcoin To $1 Million

Cathie Wood, who is the founder and CEO of ARK Invest, an investment firm with over $6 billion in assets under management (AUM) has come forward with a new price expectation for Bitcoin. The CEO had a chat with Natalie Brunell, hist of the “Coin Stories” podcast, where she made this new prediction.

As Wood explains, ARK Invest’s research team’s efforts have shown that Bitcoin’s growth will be largely driven by institutional adoption. They expect the digital asset to undergo a massive rally as the next decade begins.

Wood points to the adoption trend of new assets by these large institutional investors and how they often tend to allocate their portfolios. As the CEO points out, between 5% and 6% of institutional investors’ portfolios were allocated to assets such as real estate after the managers had tested the waters.

Bitcoin could be seen as being in the ‘testing the waters’ phase where institutional investors are still only putting around 1% into the digital asset to see how it turns out. Then gradually, they expand their allocation until they get to that 5% to 6% range. Now, when this happens, as Wood has pointed out before, BTC will cross the 7-figure mark.

Wood tells Brunell that she wants the Bitcoin price to cross $1 million by 2030. But this doesn’t mean that the CEO does not expect the digital asset to grow further as she puts it as high as $1.48 million in the next seven years.

The ARK Invest founder further points out that some companies are already starting to exceed the conservative 1% allocation. “Tesla, Square have Bitcoin on the balance sheets. But we make very cautious assumptions and I think the corporate treasury assumption is 2.5% of all cash and cash equivalent in Bitcoin.”

Wood stated:

If we’re right and the purchasing power of Bitcoin becomes so obvious in the years ahead, meaning the purchasing power goes up, instead of cash [dollars] staying pretty flat, if not, in real terms, deteriorating, then more and more corporate treasuries are going to be putting Bitcoin on their balance sheets.

She believes analysts at these companies will ask companies to put money into BTC rather than leave it in cash where the value continues to decline.

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According to a recent report by the online database platform Messari, the Hedera (HBAR) Network, an open-source, public blockchain governed by the Hedera Governing Council, has showcased significant growth in the face of a challenging crypto market during Q3 2023. 

Hedera Network Hits New Record With 99 Million Daily Transactions

Per the report, Hedera Network’s transaction volume continued its upward trajectory, achieving a new record of 99 million daily average transactions in Q3 2023. 

This milestone marks the fifth consecutive quarterly increase in transaction activity, with the Hedera Consensus Service responsible for 99% of all transactions on the network. 

Notably, the network’s revenue derived from transaction fees surpassed $1 million for the first time, experiencing a remarkable 30% quarter-on-quarter growth. 

According to Messari, the Hedera Consensus Service largely drove the revenue growth and remained independent of HBAR’s price fluctuations, as transaction fees are fixed in USD terms.

While the overall crypto market experienced a moderate downturn during Q3 2023, HBAR’s circulating market capitalization grew by 7.6% quarter-on-quarter, reaching $1.7 billion by the end of September. 

HBAR’s fully diluted market capitalization also increased by 2.5%, settling at $2.5 billion. As a result, the Hedera Network emerged as the 31st-largest crypto protocol by market capitalization, demonstrating its growing prominence in the industry.

Hedera’s TVL Skyrockets By 29%

The protocol’s Total Value Locked (TVL) reached $31 million in Q3 2023, a 29% increase from the previous quarter. While the broader market witnessed a reduction in TVL, Hedera’s year-over-year (YoY) TVL growth stood at an impressive 75%. 

SaucerSwap, the leading protocol within the Hedera ecosystem, accounted for most of the TVL, with $27 million locked, comprising 87% of the Hedera Network’s total TVL. According to Messari, this growth in TVL can be attributed to the launch of new protocols within the ecosystem.

On the flip side, the Hedera community has strongly emphasized enhancing developer tools and collaborations. 

In Q3 2023, significant progress was made toward achieving Ethereum Virtual Machine (EVM) equivalence. The community introduced developer-focused features, integrated the JSON-RPC codebase, and refined contract creation transactions through HIP-729. 

These efforts have increased compatibility with EVM networks and expanded the capabilities of smart contract development on the Hedera Network.

High Staking Percentage And Strategic Partnerships

The Hedera Network reported a high staking percentage, with 85% of the circulating supply and 56% of the total supply staked. 

Core entities such as the HBAR Foundation, Swirlds, and Swirlds Labs have staked their HBAR allocations and the Hedera Treasury to support validators in meeting the minimum staking threshold for network consensus. Notably, these entities have chosen not to collect staking rewards. 

Per the report, the Hedera Governing Council modified the staking rewards structure during Q3, adjusting the reward rate to 2.5% and setting a maximum staked quantity to ensure proportional reward rates.

Despite the challenging crypto market conditions in Q3 2023, the Hedera Network has showcased significant growth. The expansion of TVL and the dominance of SaucerSwap further solidified the ecosystem’s position. 

Despite the growth of Hedera Network’s ecosystem, the native token, HBAR, is currently trading at $0.0460, reflecting a 4.5% decrease in value over the past 24 hours. This trend has persisted throughout the year, resulting in a year-to-date decline of 24%.

Featured image from Shutterstock, chart from TradingView.com 

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Crypto analyst Egrag Crypto has been continuously bullish on the future of the XRP price and the latest prediction proves this. This time around, the crypto analyst is using a rare Bent Fork Pattern to back up his prediction that the XRP price is headed for double-digits.

The Rare Bent Fork Pattern

Egrag first mentioned the Bent Fork Pattern in a June post while showing a bullish roadmap for the XRP price. In the earlier post, the analyst points out ‘four distinct tracks’. These include the “Track A) Major Historical Support, Track B) Ranging Zone, Track C) Mid-Cycle Top, and Track D) Cycle Top.”

As Egrag explained, the Track D is the cycle top which could see the altcoin’s price reach as high as $15, although not without incidence. Despite expecting a surge, Egrag says that XRP could fall lower before this happens. However, the analyst asks investors not to fret when this happens. Rather, they should see it as an opportunity to buy the cryptocurrency for lower prices.

Now, four months after the initial post was made, Egrag has revisited this Bent Fork Pattern, doubling down on the previous prediction. In a post made on Wednesday, October 18, Egrag updated the previous prediction, showing what needs to happen for the XRP price to reach the lofty price of $15. This would mean at least a 3,000% price increase for XRP if the pattern plays out exactly as expected.

In the chart below, the analyst explains that the XRP price needs to breach the white line for the rally to begin. “the real excitement is if #XRP shatters the ‘White’ Ascending Triangle – get ready for some market-shaking action,” the analyst said.

Looking at a time frame, the crypto analyst asks investors to keep an eye out for the 3rd and 4th week of November as this is when something interesting might happen. “Feeling uncertain about your next move? This might just be your last chance to seize a buying opportunity,” Egrag said in closing.

Not The Only Bullish Chart For XRP Price

Interestingly, Egrag’s XRP price prediction using the Bent Fork Pattern also matches their other predictions for the altcoin. Earlier in the week, Egrag had also put forward another forecast but used the Elliot Wave Theory to present the bull case.

As Egrag notes, the fifth wave is where the main movement really lies where the analyst expects the price surge to happen. Just like with the Bent Fork Pattern, it also suggests a double-digit price level at the top. However, the wave theory takes it a step further with a $27 price mark compared to the Bent Fork’s $15 mark.

Another similarity between both predictions is that the June Bent Fork chart shows the XRP price at $15 somewhere between 2025 and 2026. This is the same timeframe presented using the Elliot Wave analysis, so most of this will likely play out in the bull market.

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USDT, also known as Tether, has become an integral part of cryptocurrency markets since its launch in 2014. Pegged 1:1 to the US dollar, it is the most widely used stablecoin with a market capitalization of over $83 billion as of October 2023. But it is also controversial, with opaque reserves and questions around its long-term viability.

Here is an in-depth look at how USDT works, its importance in crypto, and the risks it presents.

What is USDT? Overview of Tether Stablecoin Cryptocurrency

At its core, Tether functions as a stablecoin, meaning each token is backed by an equivalent amount of traditional fiat currency.

This peg to the dollar aims to minimize volatility compared to other cryptocurrencies like Bitcoin and Ethereum. USDT operates on different blockchains like Bitcoin, Ethereum, Tron and others, allowing it to be transferred seamlessly between different networks.

Crypto traders rely on USDT as a stable store of value when trading between different digital assets. It is also widely used on decentralized finance (DeFi) platforms for lending, borrowing, and making payments.

USDT price: $1

USDT Market Cap: ~$83 billion (as of October 2023)

Key Features of USDT Crypto

The key features that define Tether include:

Pegged 1:1 to the US dollar – USDT aims to maintain parity with the dollar
Operates on different blockchains – Enables transfer between networks
Hedges against crypto volatility – Acts as a stable haven when markets are fluctuating
Wide adoption – Used extensively in crypto trading and DeFi protocols

How Does USDT Maintain Its Dollar Peg?

According to Tether Limited, the company behind USDT, every token in circulation is backed 1:1 by their reserves, which include both traditional currency and cash equivalents. When buyers purchase USDT by depositing $1 per token, new tokens are issued while the dollars are held in reserves.

This mechanism theoretically allows users to redeem each USDT to USD. By allowing two-way convertibility between USDT and dollars, the supply can adjust to maintain the 1:1 parity.

However, Tether’s reserves have been shrouded in secrecy over the years, leading to allegations that the company does not hold sufficient dollar reserves to back all USDT in circulation. Tether settled a case with the New York Attorney General in 2021, agreeing to release periodic reports on its reserves.

So far, the redemptions have generally maintained the dollar peg. But questions linger over the breakdown of reserves and their adequacy as USDT supply has ballooned.

USDT Price Chart from CoinMarketCap

The Role and Importance of USDT in Crypto

Despite the opacity, USDT continues to play a hugely important role in cryptocurrency markets. It is one of the most widely traded crypto assets, with daily trading volumes in the billions of dollars against assets like Bitcoin.

Exchanges rely on stablecoin trading pairs like BTC/USDT to enable traders to hedge risk during times of high volatility.

USDT is also widely integrated into DeFi protocols like lending and borrowing platforms, decentralized exchanges, yield farms, and more. It provides stability in an otherwise volatile environment for decentralized finance.

The demand for USDT trading, transactions, and parking value in a stable asset continues to drive increasing adoption.

Future Outlook for Tether Stablecoin

Going forward, the biggest threat to USDT is the risk of losing its 1:1 dollar peg and collapsing in value if its reserves are inadequate. Tether also faces potential regulatory crackdowns from authorities who may threaten its viability. Competing stablecoins like USDC and BUSD are more transparent about reserves and could gain share.

However, USDT retains first-mover advantage and the network effects of wider integration in crypto infrastructure. It continues to maintain peg stability through redemptions so far. If Tether can provide greater transparency and embrace compliance, USDT may retain its dominant position for some time. But traders should exercise caution and understand the risks of relying too much on USDT long-term.

Despite controversies around reserves and regulation, Tether remains an integral cog in the crypto economy machine. But as the market matures, stablecoins built on greater transparency and compliance are likely to emerge as leaders.

How Does USDT Work?

There are a few key mechanisms that enable USDT to function as a stablecoin pegged to the US dollar:

Minting and Issuing New USDT

Tether mints new USDT when buyers deposit $1 per token with the company. The dollars are added to reserves, while an equivalent amount of USDT is issued on the blockchain ledger. This USDT enters circulation when transferred to the buyer’s wallet address. The minting helps adjust supply to match demand.

Sending and Receiving USDT Transactions

Once issued, USDT can be transacted between addresses on its supported blockchains like any other cryptocurrency. Senders can broadcast transactions and pay small network fees to send USDT to recipients’ wallet addresses. These peer-to-peer transactions are recorded transparently on public blockchain explorers.

Trading USDT on Exchanges and DeFi

USDT is listed as a trading pair on most major centralized crypto exchanges as well as decentralized exchanges. Traders can use USDT to buy and sell other cryptos like Bitcoin in a stable manner when volatility is high. In decentralized finance, USDT also serves as a stable currency for lending, borrowing, liquidity provision, and more.

Redeeming USDT for Dollars

In theory, USDT holders can redeem each token for exactly 1 US dollar from Tether Limited. This is made possible by the underlying reserves that back each token. Redemptions help maintain the 1:1 peg when USDT falls below $1 on exchanges. However, Tether reserves the right to delay or deny redemptions in some circumstances.

Pros and Cons of USDT Stablecoin

USDT provides stability amid crypto volatility but also carries risks:

Pros

Avoid volatility by parking value in USDT
Seamless transfers between blockchains
Wide acceptance in crypto ecosystem
Useful for decentralized trading and finance

Cons

Opaque reserves raise viability concerns
Regulatory crackdowns could threaten operations
Reliant on Tether’s redemption policy to maintain peg
Vulnerable to bank runs if reserves are inadequate

Tether pioneered stablecoins in crypto but transparent alternatives like USDC are emerging. Regulatory direction will play a key role in determining whether USDT maintains dominance long-term.

In conclusion, USDT remains indispensable for crypto trading and finance today. But prudent users should assess risks of relying extensively on USDT if its opaque operations and reserves raise too many questions about its sustainability. As the sector develops, the stability and transparency offered by its competitors could make them a safer bet over the coming years

USDT FAQ: Tether Frequently Asked Questions & Answers

What is USDT TRC20?

USDT TRC20 is the version of Tether stablecoin issued on the Tron blockchain as a TRC20 token. It allows faster transactions and lower fees compared to USDT on Ethereum. USDT ERC20 is available only on Ethereum.

What does USDT mean?

USDT stands for United States Dollar Tether. It is a cryptocurrency issued by Tether that is pegged 1:1 to the US dollar. Each USDT token is backed by $1 in reserves according to Tether Limited.

What is the difference between USDC and USDT?

USDC is issued by Circle while USDT is issued by Tether. USDC has greater transparency on reserves and audits compared to the more opaque USDT. However, USDT currently has wider adoption in crypto trading and DeFi applications.

What is Tether USDT?

Tether USDT is a stablecoin cryptocurrency whose value is pegged to the US dollar on a 1:1 basis. It allows crypto traders and users to avoid volatility by storing value in USDT tokens backed by equivalent USD reserves.

What does USDT stand for?

USDT stands for United States Dollar Tether. It is the ticker symbol used to designate the Tether stablecoin whose value is pegged to the US dollar.

Is USDT a cryptocurrency?

Yes, USDT is a cryptocurrency token issued on various blockchains. However, unlike volatile cryptos, USDT is a stablecoin designed to have a stable value through US dollar reserves.

What is the USDT token contract address?

The USDT token address allows users to verify USDT transactions on block explorers. For example, the USDT Ethereum contract address is 0xdac17f958d2ee523a2206206994597c13d831ec7.

What is the current price of USDT?

The price of USDT is pegged to $1.00 USD. It aims to maintain parity with the dollar through Tether Limited’s dollar reserves that back each USDT token 1:1.

What is USDT crypto used for?

USDT provides stability versus volatile crypto assets. It is used for trading, payments, earning yield, loans, and other financial activities where dollar-pegged stability is preferred.

Where can I buy USDT coins?

USDT can be purchased on most major crypto exchanges like Binance, Coinbase, Kraken, KuCoin etc. You can trade dollars or cryptos like BTC for USDT tokens on these centralized platforms.

Is it safe to invest in USDT stablecoin?

USDT does carry risks related to transparency and reserves that should be considered. Stablecoins like USDC with more transparency could potentially be safer long-term investments.

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