Varsity Study Debunks Common Narrative on USDT, Bitcoin Price Relationship
Is there a Relationship Between Tether Grants and Bitcoin Price?
A new research has come out to squash a common notion about the relationship between tether and bitcoin value. Normally, it is believed that tether issuance always boosts the market value of bitcoin. However, a study by the University of Queensland has determined that the notion is contrary to the actual situation.
The study conducted under the guidance of Wang Chun indicated that common stablecoins have a negligible impact on the market. The entire study was focused on determining the tether-bitcoin market price manipulation. The conclusion was arrived at using the VAR formula. The researchers acknowledged that there is a positive relation between tether grants and bitcoin exchange, but there is no influence on bitcoin price changes.
The study comes just two months after a study by the University of Texas stated that tether’s USDT token was deployed to manipulate bitcoin price. It claimed that manipulators deployed this method during bitcoin’s 2017 prolonged run. Researchers John Griffin and Amin Shams further claimed that during negative market growth periods, tether was constantly used to offer support for bitcoin.
VAR Model Findings
However, the VAR model now seems to dismiss this conclusion by countering each argument. The latest study opines that no evidence has been provided to back the claims of bitcoin being supported by tether.
However, the study further determines that there was evidence of a relation between USDT token issuance and heightened crypto trading in the next 24 hours. Estimates by the researchers show that we have a rise in trading capacity for bitcoin and tether a day after tether grant. They pointed out that the spike does not directly positively impact prices. They noted that the effect is short term.
A different view of these findings shows that once tether tokens are issued, investors might be buying bitcoin with USDT. However, the capacity of the grant is not huge to have any notable impact on bitcoin market price.
Additionally, the research also determined that USDT issuance is automatically correlated. This is a clear indication that tether breaks bigger grants into smaller blocks for release in a span of days. This is aimed at having an impact on trading platforms. Evidence was also provided showing that USDT trading capacity spiked after dropping bitcoin prices.