The argument isnt that there are no legitimate inflows of other stablecoins (or traditional fiat currency) into bitcoin prices. The problem is that Tether is ~80% of inflows [1], and is dubiously backed at best. If 80% of the price support disappears, prices will fall, and legitimate buy side interest from other stablecoins or fiat will almost certainly shrink as well.
[1] https://twitter.com/JacobOracle/status/1346133087877537792/p...
I think the author might be confusing volume for inflow, but they're 2 different things.
Except for timing time after time. Most rallies have a corresponding Tether print right prior to them.
The price of an asset goes up when money is being poured into the asset. For many exchanges "money" means USDT, so it makes perfect sense that USDT would be printed before a rally, regardless of malfeasance on tether's part.
Re:Tether price manipulation
by gillesjacobs on Friday January 08, 2021 @12:19PM
(#25687023)
Is there any proof or data on Tether issuance preceding rallies? Because I have seen this claim often made on Twitter, but never with any sources.
I personally dislike Tether and avoid it, but strong claims require strong evidence.
Here's an econ paper that studies that question: https://www.researchgate.net/publication/342185292_Is_Bitcoi...
Re:Tether price manipulation
by gillesjacobs on Friday January 08, 2021 @05:19PM
(#25691273)
Thanks, I will have to read it carefully, but from the abstract it doesn't seem as simple as "increased Tether printing makes BTC rally." But if there is in fact a statistically significant correlation, I would personally wager there's causation and hedge my bets accordingly.
I think the abstract does effectively say that: "these patterns are most consistent with the supply‐based hypothesis of unbacked digital money inflating cryptocurrency prices." And this point is made more forcefully in the paper.
FWIW, I don't have a strong opinion on the evidence presented in the paper -- the analyses seem sensible, but this isn't my field of expertise, so I'd be hard pressed to point out, for example, what alternative analyses they could / should have done.
Also, it's not even obvious to me that unbacked Tether causing the BTC price rallies is necessarily a reason to pull out; markets are weird.
It would seem to me that if transparent stablecoins with utility are going up, the simplest explanation for tether going up is that it serves the same role for people who have either become accustomed to it from its earlier availability, or have it as their only option due to jurisdiction. Not anything nefarious.
There seems to be little actual evidence to support conspiracy theories that Bitcoin's price movements are due to mismanagement of tether.