Does Tether Move the Crypto Market?

The stablecoin Tether, a token considered pegged to $1.00, has captivated crypto investors for several years. Its impressive growth and dotted history have driven speculation that Tether issuance has been to support the price of Bitcoin and the cryptocurrency market more broadly. In this piece, we provide a primer on Tether and present our analysis. Our findings suggest Tether prints in recent years have had a positive price impact on BTC and ETH, but we note this is not conclusive given the number of confounding factors.

Issuance, known as mints, of Tether's USDT stablecoin coincides with an increase in the price of Bitcoin and Ether. We analyzed Bitcoin and Ether prices around Tether mints ranging from 50+ million units ($50+ million at the market price of $1) to 400+ million units ($400+ million) from January 2019 to May 2021. All the mint sizes we analyzed coincided with an increase in the price of Bitcoin and Ether on the day of the mint, on a mean and median basis. Specifically, on days with mints of $50 million or greater, Bitcoin and Ether prices increased 1.5% and 1.9% on average from the prior day, respectively, while the median price increased 1.1% and 1.3%. During the period we observed, mints tended to coincide with a price increase on both the day of the mint and the day after the mint, with the strongest increase occurring on the day of the mint.