In a series of Saturday tweets, Caitlin Long mentionned that Tether Holdings Limited’s allocation of Tether’s (USDT) reserves was not invested in “short-term, low-risk liquid securities”, but rather in “who knows what quality” credit assets. The CEO of Avanti claimed that traders might have felt pressured to sell other cryptocurrencies to reduce their total risk exposure, given that stablecoin – ranked sixth with a market cap of $ 58 billion – has the potential to lower other tokens amid a credit market correction.
“If Tether remains a de facto credit hedge fund by investing reserves in this way, the markets can now safely predict that Bitcoin and crypto prices are likely to exhibit a strong correlation with the credit markets,” mentionned Long. “They’ll probably correct together.”
Long added that authorities could still choose to crack down on stablecoins after Tether’s full breakdown of reserves, but said the crypto industry could benefit from regulatory clarity:
“One of the best things for the industry right now would be getting the stablecoins to agree with US regulators, especially the Fed and the SEC. Stable coins are very important bridges between crypto and the US dollar. “
According to the Tether Holdings Limited report, 75.85% of USDT support is cash and cash equivalents, with commercial paper accounting for 65.39% of this category. Long claimed that any potential fallout in the markets “would have been entirely avoidable” if Tether had invested more in Treasuries – only 2.94% of its total cash, cash equivalents, other short-term deposits and commercial paper. – rather than apparently higher assets. risk.
The CEO’s comments follow the price of Bitcoin (BTC) falling below $ 46,000 on some exchanges – the crypto asset is $ 45,818 at the time of publication, having fallen more than 20% in the past. last seven days. However, it is unclear what role Tether’s disclosure may have played in the crypto market. Binance was also in the spotlight as a Bloomberg report claimed the US Department of Justice and the Internal Revenue Service were investigating the crypto exchange for alleged “illicit activity”.