A much-needed recovery has finally hit the crypto market today as bulls take the charge of the situation! The Bitcoin price jumped over 10% as the overall cryptocurrency market cap has surged by $10 billion. A look at the coins table on CoinMarketCap shows almost every cryptocurrency gaining over 5%, except Tether.
The Bitcoin price spiked by more than $600 and moving above $6,900 before finally settling at around $6,600 levels. At the press time, Bitcoin is trading at $6691.09, with its market cap going above $115 billion. The overall cryptocurrency market cap gained 10% before settling at 6% intraday gains, currently valued at $213 billion.
Tether Sell-off Triggers the Bitcoin Price Rise
According to Forbes, the sudden surge in Bitcoin price is the result of sell-off of the most controversial dollar-linked stablecoin Tether. The Tether stablecoin facilitates instant trading for users to buy/sell digital currencies in the open crypto market.
It is a common notion that traders usually sell a huge number of Tether tokens to buy other cryptocurrencies in the market. The recent boost in the price of digital assets confirms the notion. As we can see that Tether has lost over 3% of its price as of today. Tether is the second-most largest cryptocurrency traded in the crypto market, after Bitcoin. Furthermore, the Tether token usually exhibits stability due to its price linked to the U.S. dollar at any given point of time.
Tether Involvement with Bitfinex
Tether Limited has been often linked to crypto exchange Bitfinex for helping the exchange pump the Bitcoin price by sourcing Tether tokens. Note that both Tether and Bitfinex have the same chief executive. The crypto community has often raised questions that Tether is sourcing additional tokens to Bitfinex without actually backing them with physical USD.
A series of online articles claimed Bitfinex to be insolvent after the exchange temporarily suspended fiat deposits. However, in response to all these allegations, the exchange said:
“Bitfinex is not insolvent, and a constant stream of Medium articles claiming otherwise is not going to change this. As one of only a very few exchanges operating since 2013, with a small team and low operating costs, we do not entirely understand the arguments that purport to show us to be insolvent without providing any explanation about why.”
Today morning, the exchange issued another statement saying that they are currently working on efficient processing of the fiat deposits. It noted:
“We are working to implement a new and increasingly robust fiat deposit system to be available in the next 24 hours, by Tuesday, October 16, 2018, to allow for the efficient processing of fiat deposits. Until then, we apologize for the inconvenience of the situation.”
A Healthy Recovery
Today’s recovery brings a huge relief to crypto investors after last week’s massive correction post the IMF report. Last week the IMF released a report stating that the rising dominance of digital currencies poses threat to the global financial system. The IMF report noted:
“Continued rapid growth of crypto assets could create new vulnerabilities in the international financial system.”
The IMF also noted the growing concerns of cyber attacks on crypto exchanges. The crypto market correction followed the massive drop in stock market indices like Dow Jones and S&P 500 and Nasdaq, the previous day. This was the second time this year that crypto markets fell simultaneously with the stock markets.