Monday saw bitcoin prices surge by an unprecedented 9% driven by Tether’s sudden loss against the US Dollar. The unprecedented twist in tether’s fall has been the loss of banking partner, Noble Bank.
At the end of trading session yesterday, the BTC/USD had seen a conservative 2% gain formation, cresting past a latest drop. But the momentum began to crest incredibly in early hours of trading in Asia markets.
Bitcoin prices had breached past $7,800 over stagnating $6,300 in the past several weeks. However, the price climb was marked by the unhooking of Tether’s prices in relation to the USD. The pair of USDT/USD crashed much lower than the $0.95 in the opening hours of trade in Asian markets on Monday. Tether prices troughed to as much as $0.85 before stabilizing at $0.90.
Fall of Tether and its impact
The issue with bitcoin price is associated with this last price mark that Tether stood against the dollar. Industry experts believe that the below $1 price band is killing Tether’s value and most investors feel negative about this virtual currency.
Lack of trust in this non-fiat has automatically diverted the attention of investors towards an established crypto such as bitcoin which currently is experiencing less volatility. The negative sentiment linked to Tether has converted to positive investment sentiment towards BTC.
Why did Tether Topple
Tether had marked its stability as a coin since BitFinex, the crypto exchange, held much of its reserves for backing Tether’s USDT token in Noble Bank. However, when news emerged that the money held by the bank would not cover the full supply, there were rumors of the project being a scam.
Besides, Noble Banks own credibility came up for scrutiny as there were appeared to be connections between the crypto exchange hosting Tether, namely BitFinex, Tether the project and the bank by regulators of Puerto Rico.
Tether’s credibility also under question
However, the biggest question before investors is to find out if Tether as a Project has the funds to support USDT supply. The lack of financial audit by the Tether team has also found that retail investors are dropping their Tethers for bitcoins and other altcoins leading to the current crest in prices of bitcoin.