Tether is borrowing from the US Federal Reserve’s playbook. The chapter topic they are borrowing is on Quantitative Easing (QE).
The timing is probably no coincidence, as central banks around the world are pumping dollars, Euros, Pesos, and Rubles into the market to keep it chugging along.
Meanwhile, asset prices across the board are soaring with major indexes like the S&P 500 rising nearly 48% from their recent lows.
Crypto has enjoyed similar results. In fact, in a new quarterly report recently published by Jarvis Labs, their artificial intelligence and machine learning software indicates USDT is the driving force of crypto right now.
Since March 12th the market cap of USDT has grown from $4.6 billion to over $9 billion. Breaking this down, it means over the course of three months $50.6 million worth of USDT was entering the market every day on average.
Considering 900 new Bitcoins, approximately $8.1 million a day, are minted each day on the blockchain, the amount of USDT being added far outweighs any selling pressure from miners.
The results are clear. From the time crypto started experiencing its own form of QE in late March, Bitcoin has risen as much as 77%.
Here’s Managing Partner Ben Lilly from Jarvis Labs on the matter:
“It’s a Tether Milkshake. All this liquidity getting injected into the crypto markets are driving prices higher. If you aren’t aware of it, then you are severely handicapping yourself. Each time our software alerts us of more liquidity, it’s a clear buying opportunity… It’s really about who can capture the most value getting added.”
Tether Milkshake is borrowed from the popular traditional market Dollar Milkshake theory, which states, whatever entity can suck up the most liquidity being added to the global financial system, will win. And understanding this theory helps a trader look for opportunities unfolding in the market that line up with this outlook.
One of the areas Jarvis Labs believes will be a major beneficiary of all this liquidity is DeFi. They state it’s already apparent with the recent rise of Compound’s Token, COMP.
They refer back to their software, which tracks over 600 wallets, on-chain exchange flows, and 80 different metrics. It began watching the flow of USDT days before it wound up in Compound’s ecosystem.
The COMP token began trading on June 16, 2020, and rose 276% in five days.
Here’s Ben Lilly again:
“DeFi will be a clear winner as more liquidity enters crypto. It’s a trend we see now and continuing on for the rest of 2020. Will it be similar to the ICO mania of 2017? I wouldn’t go that far yet, but if a major bull run like we saw in 2017 starts to unfold here in the next six months, then DeFi is an area I’ll be paying close attention to.”
Their index is built on top of their primary Jarvis Index which pulls in over ten million data points across crypto. The stable coin adjustment is in response to USDT becoming a driving force in crypto since it became a noteworthy player in 2018.
The last time their index was showing a similar buy signal was in January 2019. Price rose over 270% in the following five months.
About Jarvis Labs
We are a team of passionate professionals with experience in data science, software engineering, economics, and trading who came together to develop Jarvis, an artificial intelligence/machine learning software that tracks market movers. We’ve since gone on to become a one-stop-shop for crypto traders by building new tools, metrics, and platforms every day. Stop by Jarvis Labs to learn more and subscribe to our newsletter to learn what market mover is driving the market today.
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