Joe DiPasquale, CEO of the cryptocurrency-focused hedge fund BitBull Capital, told First Mover in an email that "$10,000 still stands as a strong support and has absorbed selling pressure fairly well in the last two instances." John Kramer, a trader at crypto over-the-counter firm GSR, told CoinDesk's Daniel Cawrey that “many investors will see this as an opportunity to buy the dip.”
MARKET MOVES
After years of debating whether tether (USDT) is fully backed 1-for-1 with U.S. dollars, the stablecoin’s critics and defenders alike can now put their money where their mouths are.
Opium, a derivatives exchange, has introduced credit default swaps (CDS) for USDT. The product, launched Thursday, insures the buyer in the event of default by Tether, the issuer of the world’s largest stablecoin and fifth-largest cryptocurrency overall.
As Opium’s blog points out, USDT is the lifeblood of the borderless cryptocurrency marketplace. The oldest stablecoin, USDT remains the largest such cryptocurrency by market cap and a top-five coin overall with $13.8 billion in issuance. Traders often use it to move money in and out of exchanges quickly to take advantage of arbitrage opportunities.
“You can use it to protect yourself against (or speculate on) a systemic failure of the most widely used stablecoin in crypto,” Opium said of the new CDS contract, in a blog post to be published Thursday.
Chart showing USDT's fast growing in 2020 and dominance among dollar-backed stablecoins. (Coin Metrics)
There are nagging questions about the issuer's creditworthiness. The firm behind USDT is under investigation by the New York Attorney General’s office for alleged misappropriation of funds, and Tether revealed in April 2019 that only 74% of USDT was backed by “cash and cash equivalents.”
Paolo Ardoino, chief technology officer at Tether, said through a spokesman: “Tether is solvent. Therefore, this solution is not really interesting to us or our community.”
The solution might be interesting to traders who just want a little extra assurance.
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Bitcoin's options market has flipped bearish with the cryptocurrency registering its first double-digit decline in six months on Wednesday. Prices fell to a low of $10,006 before recovering to $10,500.
The one- and three-month put-call skews that measure the cost of puts relative to that of calls have surged above zero, a sign of investors adding bets (put options) to position for a more profound price drop.
"The next key support comes in the form of the June low at around $8,900," Kruger told CoinDesk in a Telegram chat and added further that bitcoin would eventually realize its potential as store of value.
Ethereum, the world's second-largest cryptocurrency by market capitalization, is expected to undergo a radical system-wide upgrade to improve network scalability and efficiency this by early next year. Join CoinDesk Research on Sept. 10 at 1:30 p.m. ET for a live discussion as we examine the potential market impacts of the launch of what’s known as Ethereum 2.0.
Due to its sheer complexity, Ethereum 2.0 will be rolled out in several phases starting with Phase 0. Don’t miss the opportunity to understand the risks, benefits and predictions for the next phase of this technology.
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First Mover: Buying Bitcoin's Dip, Betting Against Tether and Waiting for Jobs Report