Why is USDT Falling (Why is the Price of USDT so Low)?
Why is USDT falling? What is the reason for its sudden decline in price?On Janua
Why is USDT falling? What is the reason for its sudden decline in price?
On January 8th, Bitcoin plummeted from around $20,000 to below $30,000. Within the next day, Bitcoin quickly rebounded to above $20,000. However, while Bitcoin kept rising, USDT continued to decline and is currently priced at around $30.
So, why is USDT falling? According to recent reports from Bloomberg, Bitcoin’s price has accumulated a gain of over 70% since December of last year, indicating that the demand for USDT hasn’t decreased. Additionally, due to the volatility and low trading volume of the cryptocurrency market, many investors have started to put their funds into Bitcoin for speculation and investment.
Therefore, the reason for this situation with USDT is simple:
1. Bitcoin is often used for its payment functionality, such as remittances, or as a currency to purchase digital gold. But in reality, Bitcoin doesn’t function this way because it lacks a banking account.
2. Bitcoin itself is not a smart contract platform on the blockchain and doesn’t involve any central entity in its operation. Bitcoin is an open-source software system that allows developers to build their own applications and create new business models for profit.
3. If Bitcoin is considered as a store of value, then it becomes a good alternative.
Of course, there are other cryptocurrencies that have similar problems. For example, the Bitcoin network doesn’t allow miners to mine more tokens but provides them to node validators for storing Bitcoin and other digital assets. The fundamental root of these problems lies in the limited block size of Bitcoin and its inability to handle a large amount of computational power to ensure the security and stability of the entire blockchain, as well as a potential risk of network attacks.
In conclusion, from the perspective of the Bitcoin ecosystem and the development trends of major economies, Bitcoin is experiencing a significant economic impact. We are seeing more and more institutions and companies joining in to promote Bitcoin in the circulation field. The market value of Bitcoin is gradually rising, but the actual price-earnings ratio is still lower than the level reached during the bull market in 2017. However, although this market is relatively slow, there are still a large number of retail investors holding Bitcoin.
Another point is that Bitcoin’s price is still slightly different from the global stock market because Bitcoin’s price is determined by supply and demand. In the stock market, Bitcoin’s price is usually driven by market demand, and it is the same under current market conditions. Therefore, Bitcoin’s performance in the past few years has far surpassed that of the stock market.
Furthermore, in the past few hours, Bitcoin has experienced significant short-term fluctuations. Despite the unfavorable price trend of Bitcoin,
Why is the price of USDT so low?
USDT, the world’s largest stablecoin, currently has a market capitalization of over $40 billion. However, it is not the only stablecoin but the third largest fiat currency in the world, the US dollar (USD).
Since June 1st, both Bitcoin and Ripple have fallen below the $20,000 mark. But as BTC stands at $34,000 again, the market begins panic selling. At the same time, USDT has experienced a steep decline, falling over 30% as of the time of writing.
So, why is the price of USDT so low? According to data from bitcoinist.com, over the past month, the price of USDT has dropped from $48,000 to around $52,000. In the past week, USDT has remained relatively stable and reached a recent high of $10,800 in early August. This means that USDT has slightly fallen from its high position during the bull market in 2017.
In fact, as early as June of this year, the US government announced a cryptocurrency ban that prohibits banks, brokers, and other financial intermediaries from providing services to retail investors, including allowing individuals and companies to make purchases with digital assets. However, a few days ago, the US Securities and Exchange Commission announced restrictions on informal sales to institutional investors. According to CoinDesk, this policy has been considered “too loose,” causing most people in the country to be unable to invest or use alternative fiat currencies.
In reality, if we calculate based on the current situation, the correlation between USDT price and the US stock market is even lower than the average level of the stock market. Although this claim has no basis, in late November 2019, its correlation index hit a historic bottom and quickly rebounded to nearly 70 points, an increase of nearly 100% compared to the end of 2018.
Of course, some people have expressed concerns about this regulatory crackdown because some countries have been strongly supporting blockchain technology and various decentralized applications. However, for these startups, regulatory pressure may not be insignificant. For example, one of the members of the Libra Association under Facebook, the Diem Foundation’s CEO David Marcus, publicly announced last Thursday that it is part of the first-stage launch of a working group for issuing central bank digital currency projects. (Coindesk)
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