In a move that will arouse curiosity and speculative thinking about its potential to affect the market, stablecoin issuer Tether has risen to the position of the world’s 11th largest bitcoin holder.
Tom Wan, a research analyst at 21. co, claimed to have found a bitcoin address that may belong to Tether and now owns roughly 55,022 bitcoins worth about $1.6 billion, despite the fact that Tether hasn’t publicly published its bitcoin addresses.
Tether is the 11th-largest bitcoin holder, according to a person with intimate knowledge of the topic – the rankings are also kept on Dune Analytics by 21.co. Tether did not respond to requests for comment.
Tether’s second-quarter reserves report discloses its bitcoin holdings, which correspond to the total bitcoin specified. In the first quarter of this year, the corporation declared a recurring investment of up to 15% of revenues in bitcoin, moving its reserves away from US government debt and toward crypto. Tether anticipates that its existing and future BTC holdings will not exceed the Shareholder Capital Cushion, therefore strengthening and diversifying its reserves.
Examining Tether’s Substantial Bitcoin Holdings: Should There Be Concern?
Tether’s bitcoin position, which is part of the ‘Shareholder Capital Cushion,’ contributes to the company’s liquidity. Overexposure to bitcoin, on the other hand, may pose dangers due to its extremely volatile nature. Tether’s bitcoin holdings account for 50% of the liquidity cushion, with Cash & Cash Equivalents & Other Short-Term Deposits accounting for the remaining 85%.
As a liquidity buffer, a less volatile asset such as cash is a better choice. Tether’s rising bitcoin holdings, according to CryptoQuant research researcher Mikoaj Zakrzowski, aren’t necessarily a great problem, given they also have considerable U.S. Treasuries and other assets denominated in US dollars. The main concern is that it adds to the risk by bringing more volatility to the company’s overall reserves that back up the stablecoin.
Unraveling the Enigma of a Cryptocurrency
Tether has been chastised for not disclosing proper audits of its reserves, instead simply attestation reports. Tether was dubbed a “black box” by Binance co-founder and CEO Changpeng Zhao because of the lack of official audit reports. Paolo Ardoino, CTO of Tether, previously asserted that no stablecoin has a formal audit, only attestations. Binance has announced a collaboration with Hong Kong-based First Digital Labs to launch its First Digital USD stablecoin and provide free trading for select FDUSD pairings. Ardoino questioned Binance’s cooperation with First Digital, claiming that it does not feel genuine or exploitative.
