As per the latest reports, Avanti Financial’s chief executive and founder have shared the reason behind the recent selloffs of altcoins. In the last week, the entire cryptocurrency community witnessed how the prices of the majority of the altcoins experienced a drop.
However, Avanti Financial claimed that the recent disclosure made by Tether (USDT) for the reserves of stablecoins has resulted in the sell-offs for the altcoins.
Caitlin Long, who is the CEO and founder of Avanti Financial has shared her views about the recent price drops of altcoins.
She recently talked about the Tether (USDT) usage through her Twitter account and spoke about them through several tweets. According to the reports, she talked about Tether (USDT) through her Twitter profile on Saturday, May 15, 2021.
She talked about the Tether (USDT) reserves that are currently present in the Tether Holding. She stated that the reserves for USDT were not invested in any liquid, lower-risk, short-term securities. Therefore, the investors thought it would be would wiser to sell the cryptocurrencies.
The investors went with this approach in order to incur as little loss as possible. The investors did not want to get exposed to any major losses, therefore, they carried selling the cryptocurrencies.
It is one of the major stablecoins in the cryptocurrency market and it would turn out to be very promising if it remains as a de facto hedge fund. If the users continue investing funds the way they have invested through USDT, soon the prices of altcoins and Bitcoin (BTC) would become predictable.
According to Long, stablecoins are the perfect bridge between the US dollar and cryptocurrencies. Therefore, it would be extremely important for the cryptocurrency industry would be to bring the US regulators and stablecoins on common ground.
Out of all the regulatory authorities, the cryptocurrency industry needs to make sure that the stablecoins are on good terms with the Securities and Exchange Commission.
Just recently, Tether Holdings Limited shared a report around the current situation of Tether (USDT). The firm revealed that at present, almost 76% of the backing for Tether (USDT) comes from cash as well as its equivalent. Out of 76%, around 66% of the backing for USDT comes from commercial paper.
Long claimed that if Tether (USDT) had targeted Treasury Bills in terms of investment, then the market fallout could have been avoided completely. At present, only 2.94% out of the total investments have been made by Tether in Treasury Bills. Instead, Tether (USDT) went ahead and ended up investing in assets that posed very high risks.
The statement from Long came following a price drop demonstration from Bitcoin (BTC). At the time of writing, Bitcoin’s (BTC) price is sitting at $44,970, which is more than a 20% price drop since its all-time high of $64k per BTC.