Since half of 2019 has passed by, we can now gain a firm perspective on the cryptocurrency market’s trends over the past six months. Bitcoin is up over 140 percent, crypto-exchanges are still vulnerable and on the face of it, Tether is still mired in controversy.
Closing last year with allegations of a lack of one-for-one dollar backing and finding itself in the middle of the Bitfinex controversy, one would think the top stablecoin would be anything but “healthy.” However, a recent report claims otherwise.
Longhash, the cryptocurrency analytics firm, imparted a health score of 90 out of 100 to the stablecoin that has been accused of “fractional banking” in the past. Tether, according to the study, was classified as “extremely healthy.”
Using a comprehensive five-fold metric to analyze the health of the token, Longhash stated that USDT fared very well in four out of five metrics. The report looked at stability, in terms of price fluctuation, as the modus operandi of a stablecoin is to remain price neutral, while remaining tethered to a fiat currency.
The use and acceptance of stablecoins in the market based on volume on exchanges and trading pairs, was the second key metric. Other metrics included risk resistance against the volatility of the crypto-market, long term performance and growth of the stablecoin, relative to its market capitalization.
Practicality, the final metric, was the only point of improvement for the stablecoin. The metric was related to its use outside the fray of cryptocurrency exchanges, in payment or fundraising circles.
Gemini USD [GUSD], the stablecoin launched by the Winklevoss twins, scored 78 and outscored its stablecoin senior in terms of stability and practicality. However, it fell short with respect to market acceptance and growth paradigm.
The New York Attorney General’s report which accused Bitfinex of covering up a substantial $850 million loss using Tether did result in a drop in the USDT price, albeit briefly. This price reconciliation was hailed by Longhash as adding to the stablecoin’s risk resistance factor.
Distribution-wise, Tether was described in the report as “concentrated,” as over half of its supply is on Binance, the largest cryptocurrency exchange in the world. However, despite the lopsided supply, USDT fares better than its stablecoin counterparts, GUSD, Paxos Standard [PAX], USD Coin [USDC], and True USD [TUSD], which were referred to as “Highly Concentrated.”
Longhash concluded with the brazen possibility of an iFinex manipulation that could result in a USDT collapse,
“Could the actions of iFinex eventually cause USDT to crash? It’s possible. But at least according to the data that we currently have, we think USDT is in extremely good health.”
Barring GUSD, the other three stablecoins i.e. PAX, USDC, and TUSD were overwhelming present on Binance, with minority supply in Huobi and OKEx. Gemini USD was the only stablecoin to have a majority supply on OKEx, followed by Huobi and Gemini.
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