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Stuart Hoegner on Tether and Bitcoin Relationship

Stuart Hoegner, GC at Bitfinex and Tether to pointed to how much of the critical analysis about the relationship between Tether and Bitcoin relies on a since-debunked paper by Griffin and Shams.  He states that the paper relies on a narrow sample period and also a questionable methodology to allege the relationship between the issuance of Tether and the BTC unit price during year 2017.

He openly calls to those of them who are reading the criticism about the stable coins like Tether (USDT) as being responsible for the price of Bitcoin rally.  He states that those who are following such criticisms should be aware if such opinions are coming from those who are true participants in the crypto markets.  He also implies that it does not make any sense to take the criticisms of people who do not have any credibility to make any kind of statements about something in which they do not have an experience with.

In this regard, Sydney Ifergan, the crypto expert tweeted:  “In reality, statistics reveal a lot about Tether and Bitcoin, there is no need for critics to be active participants in crypto markets. Enough if they are knowledgeable.”

It is true that it takes experience to understand the dynamics at play, but for someone with brains and mathematical knowledge, and predictive skills there is really no need to have experience.

It looks like Stuart Hoegner likes to establish that there is no casual leading relationship between Tether issuance and the price of Bitcoin.

He stated, “The truth is that the creation of Tether and other stablecoins (the supply of non-Tether stablecoins is over $5B today) should be understood not as purchases or capital inflows, but simply like-for-like asset swaps.”

Tether (USDT) and Clarity on Stable Coins

The clarity that Stuart Hogner wants to establish goes thus.  He states that Stablecoins are created anytime an entity with fiat on their balance sheet is looking to access the system of crypto to native currency liquidity. Thus, the process is merely an exchange of commercial bank dollars for a tokenized representation of the same value.

Firms which denominate their balance sheets in stablecoins or hold stablecoins as working capital are the market makers, proprietary trading firms, exchanges, venture capital firms, and generally speaking any businesses operating in the crypto industry.

When the expenditures are denominated in cryptocurrencies, several firms transform their balance sheets from the commercial bank dollars to the tokenized dollars, which are circulating on the public block chains.

He also establishes that the growth in stablecoins is positive for Bitcoin, not because of the conspiracies around unbacked issuance, but simply because it means that the liquidity environment is vastly improved.

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