On Wednesday, August 22, the Bitcoin price showed an extremely volatile price surge gaining $400 in just half an hour of trading. The Bitcoin charts on CoinMarketCap clearly indicate this price jump as the cryptocurrency shot above $6800 in just a few minutes. However, Bitcoin failed to sustain that level for long due to low trading volumes finally retracing back to around $6600 by the day end.
While the crypto world was finding some reasons behind this price surge, a coincidence was that this price surge collided with crypto exchange BitMEX going offline for its scheduled maintenance. Also, analyst Alistair Milne and others had predicted that big trading players will try to execute a short-squeeze while pumping the Bitcoin price as the platform remained offline and BitMEX traders were unable to close out positions.
Another data from Omni Explorer shows that this activity might have been influenced by the infusion of Tether tokens (USDT) just hours before the Bitcoin price shot above $6800. The data also showed that Tether, the creator of the controversial dollar-pegged stablecoin, issued nearly 100 million USDT tokens worth $100 million and the funds were transferred from the Tether Treasury to the digital currency exchange Bitfinex.
This infusion of the USDT tokens caused the Tether circulating market to climb nearly to $2.9 billion while making it the eighth-largest cryptocurrency in the market. In the month of August , Tether has issued $415 million worth of USDT tokens along with other accusations of fractional banking reserve. Tether has been accused several times of artificially inflating the price of Bitcoin by sourcing USDT tokens to Bitfinex without actually backing them with physical USD.
The company has denied these allegations and to prove itself clean, Tether has hired legal firm Free, Sporkin & Sullivan LLP (FSS). FSS found that on the date of the inspection, USDT tokens have been fully backed by the physical USD by the company’s banking partners. Another cryptocurrency exchange Kraken, who is also a major user of the USDT tokens, has also denied any evidence of Tether’s involvement in price manipulation.
Bitcoin and the overall cryptocurrency market has been under a huge selling pressure in the past few weeks, specifically after SEC postponed its decision on the CBOE Bitcoin ETF. Bitcoin has corrected by 20% in August only, from its high above $8000 and is currently trading at $6450.
The overall valuation of the cryptocurrency market reached its 2018 low falling below $200 billion before recovering marginally. Ethereum and other altcoins tokens have been going through a very rough time as their valuations have dried up by more than 80% since the beginning of 2018. As a result, investors have turned their focus to Bitcoin which in spite of losing its price has been gaining dominance in the crypto market. Today, Bitcoin alone contributes to more than 50% market share.