The issuance of the controversial stablecoin Tether (USDT), has had no substantial impact on the price of Bitcoin (BTC), according to a new study, industry website Coindesk has reported.
Tether, the company behind the virtual token, has faced accusations that it’s been issuing USDT tokens to prop up the Bitcoin price, especially in times of weakness. However, a recent study by Wang Chun Wei, a lecturer at the business school of Australia's University of Queensland, appears to contradict these suspicions.
"Our findings show that tether grants were potentially timed to follow bitcoin downturns and subsequent bitcoin/tether trading volumes increased … However, the impact of tether grants on bitcoin returns were not statistically significant, and therefore tether issuances cannot be an effective tool for moving bitcoin prices,” Wei wrote, as quoted by Coindesk.
The Tether token is pegged to the US dollar, with the company claiming that each token is backed by one USD. However, some have expressed doubts over the validity of these claims, as Tether has never published a full audit. Wei’s study, however, does not cover this particular aspect of the controversy surrounding USDT, as it focuses whether or not the issuance of new USDT could be used to manipulate the price of the original digital currency.
"We have a null model that tries to explain bitcoin returns using past bitcoin returns. We have a full model that tries to explain bitcoin returns using past bitcoin returns and past tether grants," Wei explains, as quoted by Coindesk.
“We then show the full model isn't actually any better than the null model. Hence, past tether grants must have no impact on bitcoin returns.”