Whales reportedly hold around 80% of the entire Tether supply leading to risks of Bitcoin price manipulation.
A Pod of Tether Whales
A report from Coin Metrics says that 318 addresses holds 80 percent of the total Tether stablecoin supply right now. According to the study, at least $1 million in USDT belongs to each of these addresses.
Further in the report, it was revealed that some prominent exchanges including Bittrex and Binance are among these USDT whales. The Tether coin accounts for a major chunk of crypto trades across various platforms.
Some high-volume crypto traders from China are also among the main players. Tether is already finding major utility in China to facilitate trade with Russia. There are reports that Chinese traders are spending huge sums to buy Tether every day which amounts up to $30 million.
Whales that own a major chunk of the entire crypto supply is not really a novel occurrence in itself. Nevertheless, their ownership centralization in USDT has reached a level where it might ring some bells.
For example, take Bitcoin and you’ll find out that only 20 percent of its total supply belongs to whale wallets. Plus, unlike the Tether coin, the whale share of Bitcoin is spread across more than 20,000 addresses that hold around $1 million or more in BTC.
Manipulation of Bitcoin Via Tether
This revelation of huge ownership centralization in USDT is surely going to spark discussions on whether some market players can manipulate the Bitcoin price or not.
In an interview with Bloomberg, John Griffin from University of Texas said:
“The concentration of Tether suggests that control of Tether is in the hands of a few central players who can swing Bitcoin prices, and have a vested interest in doing so. It also suggests that many exchange players have a vested interest in keeping the Tether game going.”
Some commentators are also of the view that the issuance of Tether will be driving the price gains for Bitcoin. According to this narrative, every major USDT printing exercise points to major moves from the whales – a sign of a major Bitcoin price rally.
On the other hand, the argument from the critics is that the increase in market cap for USDT isn’t anywhere near the point where it can drive growth in crypto market capitalization.