To understand the effects of a possible collapse of Tether (USDT) on Bitcoin, Alex Kruger conducted a Twitter poll. The Poll’s question was, “What would probably happen to $BTC if USDT went down?” over 2,600 people responded by sharing their opinions on what would happen to the cryptocurrency industry if Tether were to collapse. The results of the poll show that the crypto industry is split on that question.
What would happen to $BTC if Tether goes under?
— Alex Krüger (@krugermacro) November 7, 2019
Different individuals voiced different opinions; a total of 3,248 individuals voted on the question. 24% opined that Bitcoin would pump if Tether were to collapse, 16% opined that the price of Bitcoin would first shift up then down, 38% said Bitcoin would suffer a 10-40% crash, and 22% predicted Bitcoin to suffer a disaster of new losses.
Looking at the poll, only 22% thought that Bitcoin would suffer a real disaster while the rest believed that BTC would only incur temporary minor losses. Interestingly, some predicted that the cash in Tether would be invested in Bitcoin, causing a significant upward movement of BTC price.
The collapse of Tether would be less consequential today compared to 2018 because there are other numerous regulated stablecoins. Money in Tether would, therefore, shift to other stable currencies, which will act as the offloading point for Tether. Tether is not expected to collapse anytime soon, but the increasing court matters are a severe headache for the crypto industry.
However, there is a precedent that should be considered; the last time USDT dropped below $1, BTC spiked. When Tether lost Noble Bank, its banking partner, in October 2018, the stablecoin significantly lost value against the U.S Dollar. USDT was trading at $0.9 per U.S Dollar, which caused terror in the entire market. Surprisingly, Bitcoin was not affected by the Tether issue. Instead, BTC price shot up from $6,450 on October 3, 2019, to $6,600 on October 6, 2019.
BTC’s current market movements, though not much, tend to suggest that Bitcoin can stand independently amidst a Tether crisis. It has also been noted that whenever there is tension around USDT, investors tend to invest their funds on Bitcoin. However, USDT issuances strongly correlate with Bitcoin rallies.