Does Tether Really have an impact on the Price of Bitcoin?

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Does Tether Really have an impact on the Price of Bitcoin?
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A recent study conducted by Dr. Wang Chun Wei, a lecturer at the business school of Australia’s University of Queensland, has found that the effect of Tether on the price of BTC is not “statistically significant”, contrary to what many in the crypto community currently believe.
Wei’s paper “The Impact of Tether Grants on Bitcoin,” was published in May and has been accepted for the October 2018 issue of Economic Letters.  In the paper Wei examines the accusations that USDT impacts the price of Bitcoin and whether or not the stable coin pumped BTC to all time highs in 2017.

“Our findings show that tether grants were potentially timed to follow bitcoin downturns and subsequent bitcoin/tether trading volumes increased … However, the impact of tether grants on bitcoin returns were not statistically significant, and therefore tether issuances cannot be an effective tool for moving bitcoin prices.”

Wei’s study focused around the volume of USDT in the market and the fluctuations of that volume. The study however, does not address questions and doubts surrounding the amount of U.S. dollars that actually back USDT.
Many argue that the correlation between USDT volume and Bitcoin price is too strong to ignore and that the existence of Tether hurts the maturing process of Bitcoin.  But Wei claims that he tested the theory that USDT is keeping the price of BTC artificially high and finds that this is not the case.
Wei told CoinDesk, “we have a null model that tries to explain bitcoin returns using past bitcoin returns. We have a full model that tries to explain bitcoin returns using past bitcoin returns and past tether grants.  “We then show the full model isn’t actually any better than the null model. Hence, past tether grants must have no impact on bitcoin returns.”
Wei ultimately concludes that the impact of USDT on the price of BTC is  it significant and the Tether pump is a myth. “The impact of tether is small. Claims saying that it is tether that props up bitcoin are definitely not true.”


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