Bitcoin Price Skyrockets to $7,500 as Tether Loses USD Peg
Bitcoin prices jumped 9 percent within few hours over the weekend while Tether lost grip of its USD-peg.
The BTC/USD pair closed Sunday with a relative 2 percent increase following the recent decline. However, the couple began picking momentum during the early Asian trading session and climb as high as 7800-fiat from its earlier low close to 6300-fiat.
During the same period, Tether’s USDT/USD pair dropped below 0.95-fiat at the start of the Asian session. It finally tumbled towards 0.85 fiat, before recovering towards 0.90-fiat. The couple, nevertheless, remains at a distance from its $1-peg that is creating a negative sentiment regarding its future in the crypto market.
Tether is closely connected to BitFinex, an international crypto exchange which recently removed Noble Bank as its banking partner. The amount of US dollars needed to support the Tether’s USDT token supply were said to be deposited in the same bank, resulting to temporal challenges for the stablecoin.
As a result, reports began circulating that Tether had no money to support its overall supply, with many of them referring to the stablecoin as a project scam. Speculations also revolved around the strong connections between the heads of BitFinex, Tether and Noble Bank. This comes at a time when the Noble Bank was being investigated by the Puerto Rican regulators. Reports suggest that Puerto Rican authorities have issued a warning to the bank, but the reports did not say the reason behind such action.
The negative press that USDT has recently generated is worrying investors. Retail investors are presently trading their Tether holdings for Bitcoin and other major coins, which has also experienced an impressive rally recently.
“There is no guarantee that you can redeem your tethers. There should be a way for Tether to repurchase them from you for 1 dollar. There is not. For me, this whole thing smells very like when mtGox went belly up. You want to hold your bags, will that is your decision. It is not why I am in crypto.” – One of the crypto users commented on Reddit.
