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Tether Day Trading 2024

Written By

Jemma Grist

Written By

Jemma Grist

Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.

» Jemma Grist Profile Page

Edited By

Tobias Robinson

Edited By

Tobias Robinson

Tobias is a partner at DayTrading.com, director of a UK limited company and active trader. He has over 25 years of experience in the financial industry and contributed via CySec to the regulatory response to digital options and CFD trading in Europe. Toby’s expertise and dedication to financial education make him a trusted voice in the industry, including a BBC investigation into digital options.

» Tobias Robinson Profile Page

Fact Checked By

William Berg

Fact Checked By

William Berg

William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.

» William Berg Profile Page

Updated

Jul 24, 2024

Tether uses tokenisation to create traditional government-backed currencies on the Bitcoin and Ethereum blockchain. However, these coins hold some unique characteristics which have allowed its role in the cryptocurrency markets to grow exponentially in recent years. This page will break down precisely what Tether is, including price, news, reviews and exchanges. Finally, the future of trading on Tether will be considered.

What Is Tether?

The straightforward definition is that Tether is a cryptocurrency that is supposedly backed one-for-one by the US dollar. Tokens are issued by Tether Limited. Its fundamental objective is to facilitate transactions between cryptocurrency exchanges.

By tying its value to US dollars, the idea is that traders can benefit from high-speed arbitrage opportunities without having to use slow wire transfers. In addition, you benefit from the stability of the US dollar and the operational flexibility associated with cryptocurrencies.

In February 2018, Tether stood as the 15th largest cryptocurrency in the world by market capitalisation, at around $2 billion USD.

History

Understanding the cryptocurrency’s turbulent history will put you in a better position to speculate on whether the price will rise or crash. Formed in November 2015, Tether first went by the name Realcoin. However, the original concept of asset-based cryptocurrencies hit the mainstream with the white paper ‘Mastercoin’ by J R Willet in 2012.

In the last two years, the cryptocurrency has developed close ties with Bitfinex, which is currently the largest exchange in the world. In fact, both companies share the same management team. For example, Jan Ludovicus van der Velde is CEO of both Bitfinex and Tether, while Philip Potter is the chief strategy officer for both companies.

Who Uses Tether?

As Mati Greenspan pointed out “Anybody who’s trading on some of the major exchanges [holds Tethers].” This is because companies, such as Bittrex, hold a client’s balance in USDT rather than dollars.

Widespread adoption by so many exchanges is perhaps unsurprising. The uncertainty in the crypto space makes maintaining relations with banks challenging. Whereas this cryptocurrency offers a stable alternative, with the same low volatility of the dollar. Also, holding client’s funds in Tether means exchanges can reduce transaction costs and fees until users are ready to redeem capital as dollars.

In addition:

• In times of high volatility, traders can lock in returns using USDT and transfer funds between platforms.
• You can also use Tether to buy other cryptocurrencies, such as Litecoin and Ethereum.

Benefits

There are a number of good reasons to download software and start day trading Tether, including:

• Importance to crypto markets – Although their market value is currently around $2 billion, Tether plays a huge role on many exchanges. In fact, recent weeks have seen the coins finishing at the end of the day as the third-most traded digital currency.
• Stability – In theory, there is less risk of Tether crashing because unlike other cryptocurrencies, such as ethereum, it is pegged to the US dollar.
• Blockchain – Users should benefit from the same level of security that comes with open blockchain technologies.
• Backed – Each coin is backed one-to-one by traditional currency held in reserves.
• Integration – The most widely integrated digital-to-fiat currency is Tether. You can buy, sell and trade their coins at popular exchanges, including Shapeshift, Bitfinex, GoCoin, and more.
• Transparency – Each day the company publishes daily holdings, while audits are to take place regularly.

Dangers

There also some dangers to Tether cryptocurrency price predictions that need to be explained, including:

• Negative news – Both Bitfinex and Tether have received subpoenas from the US Commodity Futures Trading Commission (CFTC). Unsurprisingly, such news has dampened market sentiment.
• Reserve concerns – Recent allegations that the company is not holding the reserves it has promised may impact Tether to USD prices. If true, this could see prices of cryptocurrencies crash, seriously damaging major exchanges. The company simply isn’t being transparent about where and how they are holding their reserves.
• Manipulation – In November the New York Times stated: “One persistent online critic, going by the screen name Bitfinex’ed, has written several very detailed essays on Medium arguing that Bitfinex appears to be creating coins out of thin air and then using them to buy bitcoin and push the price up.”
• Potential damage – As Mati Greenspan highlighted “The issue is that the volumes against Tether have been growing lately…They’ve been above 10% of total volumes on bitcoin for a few weeks already.” Although cryptocurrency charts can’t prove it yet, a collapse in price could cripple all cryptocurrency assets that people have been trading with using USDT.

So, cryptocurrency news, reviews and websites are expressing increasing concern about the behaviour and practice of the company. All of which should make prospective investors pause before trading Tether on Binance or anywhere else.

Security & Liquidity

Holding US dollars is essential if the company is to meet customers’ withdrawal demands. To prove they can do this, they have promised external audits. However, no such audits have taken place. In fact, in January 2018 the company announced they had cut ties with their auditor, Friedman LLP.

November 2017 also saw the company lose around $31 million USDT in a hack. Trading was suspended for a month while software was introduced to render the stolen tokens untradable. However, this doesn’t negate concerns that the cryptocurrency is unsafe and unstable, making it a questionable investment vehicle.

What’s Next?

Cryptocurrency mining and tickers are becoming an increasing part of everyday life. Tether has been quick to gain momentum, for example. However, worries over dollar reserves, security and regulatory action are causing serious concern. Perhaps a new auditor will step in and tackle the current anxiety.

But their trouble also looks to be coming at an uneasy time for the cryptocurrency market in general, as many of the major digital currencies fell by approximately 40% in January 2018. Fears over Tether may not be entirely responsible, however, it doesn’t look to have helped.

Perhaps this means we are on a path to the equivalent of a bank run, where Tether value could hit zero and customers would demand their fiat money back. As a result, it may be unable to prop up remaining cryptocurrencies.

Yet despite recent turbulence, many believe if cryptocurrencies can survive a blanket ban in China, they can survive anything.

See our cryptocurrency page for more information.