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⚡Tether Procures 8.9K BTC for $380M🧩

Croxroad

19 Jan 2024 — 5 min read

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🏟️ Tether's Bitcoin Buying Spree

In a strategic move to diversify its portfolio, Tether, the renowned stablecoin issuer, has made a significant addition to its Bitcoin (BTC) holdings. According to reports from The Block, Tether acquired an impressive 8,888 BTC at the close of the fourth quarter, investing a substantial $380 million in the process.

This latest move has propelled Tether to the position of the 11th-largest holder of Bitcoin globally, as indicated by rankings from Dune Analytics. The company's Bitcoin holdings now stand at an impressive 66,465, solidifying its presence in the competitive cryptocurrency market.

The decision to increase Bitcoin holdings aligns with Tether's announcement in May 2023, where the company revealed its intention to allocate up to 15% of its profits into Bitcoin. This strategic shift aims to move away from conventional assets such as cash and U.S. Treasury bonds that traditionally back Tether's USDT stablecoin.

As of the latest attestation report, Tether's USDT stablecoin boasts a staggering market capitalization exceeding $95 billion, reaffirming its status as the world's largest stablecoin. The company's diversified portfolio now includes $72.6 billion in government bonds and $1.7 billion in Bitcoin, among other allocations.

Tether's foray into Bitcoin investments has not been without scrutiny, with the quality of its assets often under the microscope. However, Cantor Fitzgerald CEO Howard Lutnick, whose firm acts as a custodian for Tether, recently provided reassurance, affirming the legitimacy of Tether's holdings.

This strategic move into Bitcoin began in September 2022 when Tether, headquartered in Switzerland, made its initial Bitcoin purchase. Since then, the company has consistently adjusted its portfolio, underscoring its commitment to adapting to the dynamic landscape of the cryptocurrency market. With this recent acquisition, Tether continues to assert its position as a key player in the evolving digital asset space.

🇺🇲 Silver Slips, Bitcoin Soars

In a remarkable turn of events, Bitcoin Exchange-Traded Funds (ETFs) have outpaced their silver counterparts in the United States in terms of Assets Under Management (AUM) within just a week of trading. The surge in popularity of Bitcoin ETFs can be attributed to the significant market interest they have garnered, as noted by Jag Kooner, the Head of Derivatives at Bitfinex.

Kooner emphasised the role of pent-up demand for bitcoin as a driving force behind the digital asset's ascent, surpassing silver in AUM. Previously, silver held the position of the second-largest single commodity ETF in the U.S. in terms of AUM. However, spot bitcoin ETF funds, including the conversion of Grayscale's GBTC trust, now collectively hold approximately 647,651 bitcoins, translating to a staggering $27.5 billion in AUM, according to CC15Capital.

Data from Coinglass reveals that the Grayscale Bitcoin Trust ETF (GBTC) alone holds around 619,000 bitcoins, solidifying its dominance in the market.

This shift places silver in third position in terms of AUM within the single commodity ETF asset class, with approximately $11.5 billion distributed across five ETFs, according to ETF Database. In comparison, U.S. funds holding gold boast a combined AUM of $96.3 billion, spanning across 19 ETFs.

Jag Kooner pointed out that Grayscale's conversion of its existing bitcoin trust into an ETF instantly created the world's largest bitcoin ETF, underscoring the monumental impact of this strategic move. The swift success of Bitcoin ETFs is reflected in the substantial trading volume, surpassing $12 billion within just five days of trading, according to Yahoo Finance data compiled by The Block.

Kooner remains optimistic about the sustained interest in Bitcoin ETFs, citing competitive fee structures implemented by ETF issuers. These structures, featuring discounted fees and fee waivers, are expected to attract more investors and foster further competitive pricing among ETF providers.

Despite some in the investment community perceiving cryptocurrencies as risky, the growth of Bitcoin ETFs is seen as a potential catalyst for more innovative crypto ETFs, possibly introducing new underlying assets such as ether, according to Kooner. The strong performance and trading activity in the first week serve as a promising indicator of the continued evolution and acceptance of cryptocurrency-based financial instruments in traditional markets.

🎁 What Is Bitcoin Halving?

Embark on a journey into the heart of Bitcoin's blockchain with Croxroad's latest series, "What is Bitcoin Halving?" Dive into the intricacies of one of the most pivotal events that shape the cryptocurrency landscape.

Since the historic year of 2020, Bitcoin's blockchain has undergone a transformative process known as halving. This phenomenon occurs approximately every four years, causing a profound impact on the reward structure for miners who validate transactions on the network.

At the onset, miners were generously rewarded with 50 bitcoins (BTC) for each successfully mined block. However, with the 2020 halving event, this reward was reduced to 6.25 BTC per block. The upcoming halving, anticipated to take place in early-to-mid 2024, will mark another significant reduction, slashing the block reward in half once again to 3.125 BTC.

The series aims to demystify the concept of Bitcoin halving, shedding light on its historical significance and exploring its implications for the cryptocurrency ecosystem. As the reward for mining continues to decrease with each halving event, understanding the dynamics of this process becomes crucial for both seasoned enthusiasts and those new to the world of blockchain technology.

While the immediate impact of halving events is keenly felt by miners, the broader implications extend to the entire Bitcoin community. Croxroad's series will delve into the historical context, the rationale behind the halving mechanism, and its potential influence on the market.