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Tether Supply to Circulating Ratio could Determine USDT’s Bearish or Bullish Sentiment

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Tether Supply to Circulating Ratio could Determine USDT’s Bearish or Bullish Sentiment

According to a tweet by Santiment, several Tether addresses holding between 10 000 to 10 million of the stablecoin have the highest USDT ratio in supply for approximately three months. The tweet also suggests that this is an indicator of a bullish trend for the top stablecoin due to increased buying power. Furthemore, the bullish sentiment is not inversely proportional to what Bitcoin whales hold of its supply. 

Tether Reserve Issues

More research from Santiment recently indicated that 80% of the USDT supply is in addresses holding $1 million coins or more. Combined with today’s release, the stablecoin shows great progress in the markets over the past few years. Additionally, the expected bullish trend due to this factor suggests added USDT value in the near future. 

Tether holds over 3% of the total market capitalization of the cryptocurrencies in the market, standing at $79 473 742 685.95. Keeping this in mind, whale addresses holding the most USDT make up nearly 50% of all the addresses. 

The circulating percentage of USDT compared to its supply still remains to be lower, with most addresses transacting aunts lower than $1 million. It supports the idea of USDT whales having higher expectations for the coin and waiting to pump it to get the best returns. However, there are still sentiments surrounding the nature of its supply and circulating amount.

Tether uses the US Dollar as its backing. However, questions are constantly raised on how much and where the Tether reserves are. However, the crypto company did not disclose the other sources of its backing, said to be cryptocurrencies and commercial paper. 

Late last year, the crypto research firm, Hindenburg put forth a bounty of $1 million for any credible information concerning the stablecoin’s backing. Additionally, market participants expressed worry about the seemingly hush information concerning the same. ASs such, most people demanded that the company give in to the demands of its enthusiasts.

Hindenburg explained its skepticism surrounding the credibility of Tether’s backing, further mentioning the suspicious nature of the company’s reluctance. However, Tether stands with its narrative that all its backing is legitimate despite the vague approach to the matter. 

It also described the reasons for its approach as staying on the right side of the competition it is facing during court proceedings alongside crypto exchange Bitfinex in 2021. In its opinion, the strategies it is using remain necessary to deal with the rising number of competitors through sensitive data, including compliance documents, customer information, and its financial strategies. 

What the Market May Expect

Considering the continued shakiness of the details following USDT reserves, a few things could determine how its market trends fair in the coming days. The most worrying issue for its enthusiasts is if Tether winds up having low exchange reserves. It determines the percentage of USDT held in centralized exchanges’ wallets.

If there are low exchange reserves, it could mean that USDT holders are withdrawing their investment from the exchanges to hold or otherwise. Moreover, this would mean benefits in the long term compared to short-term investment opportunities. 

Thus, the supply ratio being higher than the circulating would also mean a lower in and outflow of USDT in exchanges. Eventually, depending on where USDT holders decide to trade their coins, its price could be bearish or bullish: outside-exchange trading could mean bearish prices while in-exchange trade could increase bullish possibilities. 

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