INTERNATIONAL – Bitcoin continues to trade at nearly a $300 ( R4,299) premium on the Bitfinex cryptocurrency exchange compared with rival platforms on speculation traders are dumping the so-called stable coin Tether in favour of the world’s largest cryptocurrency.
Over the past few days, Tether has broken out of its historically tight trading range around $1, fueling uncertainty that investors may be losing faith in the coin.
Unlike Bitcoin, whose value fluctuates wildly from day to day, Tether’s tokens are designed for stability. Prices for the coins have historically stayed near $1 because Tether says each one is backed by a dollar in its bank accounts.
Tether, which shares management with Bitfinex, is now trading for 97 cents and touched 85 cents earlier this week on at least one exchange. With a market cap of $2.1 billion, Tether is the largest of the stable coins, which are designed to let traders escape cryptocurrencies’ volatility and make transactions easier.
Many investors who bought Tether through Bitfinex are now trying to dump their holdings for Bitcoin, Alex Michaelis, co-founder of researcher CoinSchedule, said in an email.