Early Wednesday morning, the bitcoin price leaped nearly $300 in just one minute, spurring a rally that carried the flagship cryptocurrency from $6,466 to $6,899 during a frenzied half-hour of trading.
Analyzing Wednesday’s Bitcoin Price Pump
Unfortunately, BTC proved unable to sustain that level, and after tapering off throughout the morning and early afternoon, the bitcoin price made a severe downward pivot that reversed the effects of the early morning rally.
As CCN reported, the pump occurred almost at the exact moment that BitMEX, the largest leveraged cryptocurrency trading platform, went down for scheduled maintenance.
Analysts including Alistair Milne had predicted that large-scale traders might attempt to execute a short squeeze by boosting the bitcoin price while the platform was offline and traders were unable to close out positions, and there is evidence that this is what occurred.
However, others have suggested that traders used the BitMEX downtime as an opportunity to engage in illegal market manipulation, under the pretext of a short squeeze.
The Role of Tether (USDT)
Either way, this activity may have been fueled by an influx of new USDT into the market just hours prior. Data from Omni Explorer shows that Tether, creator of the controversial, dollar-pegged tether (USDT) cryptocurrency, issued 100 million new tokens on Tuesday afternoon — funds that were sent from the Tether Treasury to crypto exchange Bitfinex. The move raised tether’s circulating market cap to nearly $2.9 billion and further cemented its status as the eighth-largest cryptocurrency.
Tether, whose tokens are allegedly backed by physical USD at a 1:1 ratio but has faced accusations of fractional reserve banking, had already issued $415 million worth of USDT in August alone, bringing the monthly total above the $500 million mark — with more than a week still left to go. According to the firm’s website, it has been authorized to issue approximately $151 million worth of new tokens that have not yet been distributed, suggesting that USDT’s market cap could continue to swell heading into September.
