It’s official: stablecoin Tether will allocate up to 15% of its net realized operating profits to the purchase of Bitcoin.
Below are all the details.
Summary
Tether plans to increase Bitcoin purchases
As we know, stablecoins, including Tether, have come under the magnifying glass since the demise of Terra UST in 2022.
More specifically, issues of reliability, robustness, and trust arrived when questions began to arise about the security of these stablecoins.
However, Tether has fully maintained the claim that USDT is overcollateralized. Not only that, the stablecoin issuer also released its first quarter collateral report, in which it unveiled a reserve of $1.5 billion in BTC.
Now, as part of its new investment strategy, Tether is planning to increase Bitcoin purchases. According to Tether’s latest announcement, the company will allocate up to 15% of its net realized operating profits to the purchase of Bitcoin.
Tether also assured that future and current BTC reserves would not exceed the ‘cushion’ of shareholder capital.
The stablecoin issuer also assured that it would hold possession of the private keys associated with all of its Bitcoin holdings. In addition, the statement highlights that only realized profits would be used for the investment strategy.
Speaking about the decision made, Paolo Ardoino, CTO of Tether, said the following:
“Our investment in Bitcoin is not only a way to improve the performance of our portfolio, it is also a method of aligning ourselves with a transformative technology that has the potential to reshape the way we do business and live our lives.”
Market uncertainty also affects Tether
The on-chain analytics platform, Glassnode Alerts, shared on Twitter today some new data regarding Tether (USDT). Specifically, according to the post, the outflow volume (7d MA) for USDT reached a one-month low at 22,257,226,754 USDT.
This recent drop marks a decrease from the previous one-month low of 22,651,224,549 USDT recorded on 1 May 2023. The outflow volume for USDT, which sets a new low, means fewer people are withdrawing or moving USDT from crypto exchanges.
Glassnode also tweeted this morning that the number of receiving addresses for USDT recently reached a 5-month low of 2,724,173. This is a slight decrease from the previous 5-month low of 2,727,774, observed on 15 May 2023.
What does the achievement of these new lows mean for Tether?
The decline in address receipt mentioned above could suggest a potential decrease in the number of users or entities actively receiving USDT.
In addition, it could also indicate a reduction in demand for USDT or a shift in user preferences to other cryptocurrencies or stablecoins.
Either way, the fact that both of these metrics have reached new monthly lows indicates a lack of confidence or uncertainty in the cryptocurrency market.
Traders may be reluctant to make significant moves with their USDT because of market volatility or other factors affecting the broader crypto ecosystem.
Looking at CoinMarketCap‘s data, for example, we see that the last 24 hours have not been kind to most cryptocurrencies in the market.
In fact, most of the top ten cryptocurrencies by market capitalization suffered price losses in the last day.
This includes both market leaders, Bitcoin (BTC) and Ethereum (ETH), which suffered price losses of 0.85% and 0.62%, respectively, during this period.
Meanwhile, other altcoins such as XRP, Cardano (ADA), Polygon (MATIC), and Solana (SOL) experienced price declines of more than 1%.
