On Monday Oct 15 2018, within the course of about an hour, the Bitfinex trading premium on Bitcoin (BTC) went through the roof, soaring from around $138 to as high as $700. The price on Bitfinex reflects the fact that Tether (USDT) has effectively broken its dollar peg. As of 06:35 UTC, BTC continued to shoot upward on Bitfinex, going as high as $7,045, with no end in sight. Later, prices moved up to $7,280.
BTC prices shot up to $6,709.26, and the price pump quickly spread throughout exchanges as a form of trading contagion. Bots and human decisions may lead the dollar price higher, but there is an attempt to exit Tether.
We know that Tether hit a low of $0.85 on Kraken and is still trading at a 3-4% discount throughout the market.
Tether’s market cap has fallen from $2.8B to $2B in the last two weeks. How can that happen with a coin that is pegged to the dollar? The only way is if Tethers are being removed from circulation.
There are more questions than answers from Bitfinex/Tether. It is clear that Tether will concede market share to USD, USDC, and TrueUSD which are audited and/or regulated and arguably better versions of Tether.