Tether’s rise is disproving the market.
Let the naysayer have their say, but what Tether is actually doing speaks louder than words. In the midst of a crypto crunch, as Bitcoin currently stalls, the world’s top stablecoin is gaining value. Crypto investors are on the fence with Tether, mainly, because its rally is a surprise.
Looking Past the Technical Analysis
Needless to say, you can’t believe everything you find on financial charts. Yes, technical analysis is effective, but what’s happening with Tether defies everything crypto is doing. At times, the fundamentals, like balance sheets, resources and income, say more than charts.
This is now the case, and the news we have for Tether makes “fundamental” sense. The billions it just pocketed in profits come, at its core, from a change in the business’s fundamentals. In one business quarter alone, Tether generated $4.5 billion in net profits.
We’re only now starting the second quarter of 2024, having three more to go.
Where Did Tether’s Rise Come From?
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The rush in revenue reported by Tether comes from “a stockpile” of Treasury bills that it has held since last year. What was only worth $80 billion then is now worth $90 million in value. Treasury notes incur interest, and most of the reported billions made by Tether come from APY.
The crypto agency also earned a hefty sum from issuing stablecoins that “tether” with the rise and fall of the US Dollar. With portfolio management alongside the sale of its tokens, the agency raised $1 billion. Yes, this firm acts as an asset manager.
In order to tether with the US Dollar, the firm needs a cash reserve to back the value of its token with. This cash reserve is considered its “assets under management,” which is handled through its portfolio-management services. The Tether portfolio currently consists of Bitcoin and gold.
These holdings means that its recent revenue boost had to do with Bitcoin rising in price.
How Secure Is Tether’s Current Value?
For the first time ever, Tether’s fiat-backed stablecoins are now supported by roughly 90% of its value in cash equivalents. Out of all of its current assets, 90% of Tether’s value is liquid, meaning that it can be cashed out now or on demand. This is the best level of security you can get when investing in a stablecoin that is tied to a different but relevant asset.
Now is often the best time to invest when you want to get in low but sell high.
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