“Markets now can safely predict Bitcoin and crypto prices will likely exhibit high correlation with credit markets,” said Long.
The founder and CEO of Avanti Financial is claiming Tether’s recent disclosure about the stablecoin’s reserves may have contributed to the altcoin selloffs last week.In a series of Saturday tweets, Caitlin Long said that Tether Holdings Limited’s breakdown of Tether’s (USDT) reserves were not invested in “short-term, lower-risk, liquid securities,” but rather credit assets of “who-knows-what quality.” The Avanti CEO claimed traders may have felt compelled to sell other cryptocurrencies to reduce their total risk exposure, given that the stablecoin — ranked sixth with a $58 billion market cap — has the potential to bring down other tokens amid a credit market correction.“If Tether stays a de facto credit hedge fund by investing reserves this way, markets now can safely predict that Bitcoin and crypto prices will likely exhibit high correlation with credit markets,” said Long. “They will probably correct together.”Long added that authorities may still choose to crack down on stablecoins following Tether’s full reserve breakdown, but said the crypto industry could benefit from regulatory clarity:
