Stablecoins. They are the only kind of cryptocurrency that hardly ever fluctuates. It all started with the U.S. dollar Tether token introduced back in 2016. Today there are several others on the market including the USDC and the kUSD among others, both of which are built on the Ethereum blockchain.
Regardless of how these coins are built, there is a good case to be made that Bitcoin’s recent price run up, which is seeing the project sit at a value of nearly $10,000 USD per coin isn’t just related to the upcoming halving event that’s merely days away. It could be because traders and investors are using stablecoins to strategically inflate the price. Many conspiracy theorists in the crypto space believe this is what happened when Bitcoin reached its all-time high of nearly $20,000 USD at the end of 2017.
Let’s investigate how this all works and really find out if this recent bull run might have an artificial taste to it.
How to Use Stablecoin to Pump Up the Bitcoin Price
First thing’s first. There is a Twitter account called Whale Alert. It’s really just a bot that picks up on major transactions that go through the Bitcoin network. Anybody can have access to it. Over the last few weeks, with the Bitcoin price moving decidedly higher and higher, the Twitter account picked up on a big transaction. It notes that an investor moved $50 million in .U.S. dollar Tether tokens to the world’s most popular cryptocurrency exchange, Binance.
In order to see the Bitcoin price go up suddenly at the time, an influx of $30 billion in liquidity needed to enter the market and purchase Bitcoin. The popular theory is that the $50 million “Whale Alert” is what triggered it all.
This essentially promotes something that many skeptics believe causes price manipulation in a cryptocurrency market that is still relatively small in terms of volume when compared to traditional international foreign currency markets.
So What’s The Big Deal with Tether Tokens?
Surely some of the world’s wealthiest and most astute investors might be smart enough to sit on the sidelines and take a gamble on cryptocurrency at a time when the new circulating supply of Bitcoin’s is about to cut in half. So what’s the big deal?
The thing is the U.S. Dollar Tether token is supposed to be stabilized by real money. Meaning that with more than $6 billion of Tether tokens circulating the cryptosphere, there have to be major banks in the background backing all of this. And yet, the creators of Tether have never gone far enough to prove to the world that this is actually true.
Ongoing lawsuits involving another crypto exchange called Bitfinex and the makers of Tether claim that both platforms are responsible for a high degree of market manipulation occurring at various times over the last couple of years, with no clear-cut bookkeeping records proving anything to consumers about the stability of the stablecoin.
Hear Evil, See Evil?
The devil in disguise with regard to these tether tokens is the fact that it brings into question whether many of Bitcoin’s bull runs are actually based on anything fundamental or organic, or whether it’s all just manufactured. Many believe that the bull run between March 2017 in March 2018 was largely manufactured by investing whales holding stablecoins and artificially pumping up the price at the same time.
Still the fact remains. Whether the price of Bitcoin is going up because of market manipulation, the halving event, or just greater fundamental adoption of cryptocurrencies than we’ve ever seen before, the early birds are currently getting their worm. Many predict this most recent bull run will see the price go well beyond the $10,000 mark and as of the time of this writing, the market is sitting just a little under $1,000 dollars short of that milestone.
Bitcoin to the moon and beyond!