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Tether Dominance Rises, Hints At Potential Bitcoin Downturn: Report

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  • Tether’s rising dominance signals a potential bearish shift in Bitcoin, according to a recent market analysis.
  • Inverse trends between Tether and Bitcoin hint that Bitcoin’s recent gains may be short-lived.
  • Investors eye Tether’s upward momentum as a signal for possible volatility ahead in Bitcoin’s price

Tether Dominance (USDT.D) has been recently garnering market focus as it may indicate the upcoming bearish trend for Bitcoin. In a recent X post, Alan Santana pointed out that the growing market share of USDT may indicate a change in the Bitcoin trend.

Tether Dominance had been in a bearish trend for the better part of the first quarter of this year and was characterized by a series of lower lows and lower highs. Nevertheless, in March 2024, this trend was altered dramatically, which created a rounded bottom on the chart and signposted a potential rebound for USDT.D.

Tether’s Impact on Bitcoin

Recent price action of Tether has been quite organized in a symmetrical range bounded by an upward sloping trendline with high volumes on the bullish side. Each time USDT.D approaches the lower boundary of this channel the asset is usually seen bouncing off this level while also coinciding with a downward movement of the BTC price which gives this relationship between the two assets a clear inverse correlation.

The upward movement of USDT Dominance in the second half of October has reinforced this tendency, which leads to the presumption that the recent growth of Bitcoin may be temporary. Some investors regard this as a sign of flight to quality, a trend that usually occurs before Bitcoin volatility re-emerges.

Tether has become more important as a reference within thecryptocurrency market, especially at times of volatility. When USDT.D rises, investors could be moving to stable assets, which could be bearish for Bitcoin in the coming days.

Tether’s Growing Market Influence

The recent rise of USDT makes investors in Bitcoin to pay close attention to market conditions because the two assets tend to trend in opposite directions before major changes. The crypto market is also observing USDT.D as a potential indicator of what may happen to Bitcoin next.

Tether remains the dominant force in the market and its increasing market share is a warning sign for those with exposure to Bitcoin. This development may suggest where Bitcoin is headed as USDT is a dominant player in the market, and thus, market participants should pay attention in the coming days.

Tether Faces Fraud Allegations, Raising Fears of a Crypto Market Collapse

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Cyber Capital’s founder and CIO Justin Bons has leveled severe accusations against Tether. In a series of X posts, he said that USDT is engaged in a $118 billion fraud, and criticised the company for not providing evidence of its reserves and having not undergone a formal audit since its establishment.

While USDT keeps on claiming that it holds lots of assets, there has never been an audit done to confirm this. This lack of transparency is problematic for the crypto industry, as market players are left to rely on Tether’s claims of having $118 billion in collateral, which has not been independently confirmed.

Tether’s Looming Risk

The analyst notes that this is a higher risk than the Terra Luna collapse, indicating a potential systemic failure. He noted that should something going wrong with USDT, the consequences could be disastrous and affect the entire cryptocurrency industry.

Bons also pointed to Tether’s past misconduct in handling financial affairs. As of 2021, the Commodity Futures Trading Commission (CFTC) accused USDT of issuing false reports of its reserves, but the latter has not been audited yet to this date. However, as he underlined, Tether released an ‘auditor’s report’ together with BDO, but this is not equivalent to the full, unqualified audit that the company has been promising since 2015.

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Other issues with USDT governance structure also make it suspicious. New information has emerged that only two board members control USDT Holdings, which has led to concerns on the company’s reserves’ security and independence. This level of centralization means that a few individuals can have control or exert control over the whole operation and this poses a threat to investors.

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Tether’s Controversial Connections

He also raises concern over Tether’s affiliations with sketchy banking methods as well. Tether also has links with Bitfinex, an exchange which is operated by some of the same people who are involved with USDT and the company’s affairs with Crypto Capital, a Panama based bank that is accused of money laundering for drug cartels has also sparked controversies. In 2019, Crypto Capital’s assets were seized and this put both Bitfinex and Tether in a very vulnerable situation which raised questions regarding their operations.

Nevertheless, Bons warns that with USDT market capitalization growing, USDT poses a threat to the cryptocurrency market. He wants investors to switch their assets to a more secure and more transparent stablecoins and also to be cautious and safe from a potential market crash.

While Tether remains the main player in the stablecoin market, more and more people in the cryptoverse call for transparency. The recent allegations have further raised concerns on Tether’s operations with many people wondering on the stability of the market in the coming days.