Bitcoin and cryptocurrency investors are gearing up for the long-awaited bitcoin halving this month—which will see the number of new bitcoin entering the market cut by half.
The bitcoin price has soared this week and is now a strong contender for 2020’s best performing asset, climbing to over $9,000 per bitcoin for the first time since late February.
However, while many traders are betting the bitcoin price will climb as a result of this month’s cut to supply, the latest bitcoin bounce may have happened for entirely different reasons.
Shortly before bitcoin’s 20% rally this week, a large transfer of the stablecoin tether was made to bitcoin and cryptocurrency exchange Binance.
Tether is a stablecoin pegged to the U.S. dollar on a one-to-one basis with its creators claiming they keep one U.S. dollar in reserve for every tether token issued.
Tether tokens worth a little over $50 million were transferred to Malta-based Binance early on Wednesday, just hours before bitcoin began its $30 billion pump.
A Twitter bot that records major bitcoin and cryptocurrency trades, called Whale Alert, picked up the transaction.
Over the past month Tether Ltd, which controls the stablecoin tether and shares owners and senior staff with the British Virgin Islands-based bitcoin and cryptocurrency exchange Bitfinex, has ramped up the number of tether it’s creating—minting over $1 billion worth of the stablecoin.
“[On Wednesday we] witnessed extensive buying activity and the high level of scalability and liquidity evident on our platform made us able to seamlessly service all these requests,” boasted Bitfinex chief technology officer, Paolo Ardoino—who also serves as the chief technology officer of Tether—in a statement that pointed to major U.S. bitcoin and cryptocurrency exchange Coinbase’s unfortunate outage during the sudden bitcoin rally.
There is currently some 6.3 billion tether tokens in circulation, compared to just 18 million bitcoin.
Last year, it was suggested around half of bitcoin’s value between March 2017 and March 2018 was created by trades between bitcoin and tether—casting doubt over whether bitcoin’s epic 2017 bull run happened organically.
Many have called for Tether’s dollar reserves to be externally audited amid claims tether’s dollar peg is “no longer credible.”