Tether Limited produces the USDT token and it sustains actual assets. According to the company, the value of its tokens are always pegged 1:1 to their associated real world assets. This means that, in theory, if the exchange rate between the US dollar and Malaysian Ringgit is US$1 to RM4.32 today, then the Tether price would also be roughly RM4.32.
As of the time of writing, Tether has issued three fiat-backed tokens: the USDT which is pegged to the US dollar, the EURT which is pegged to the Euro, and the CNHT which is pegged to the offshore Chinese Yuan. Of the three, the USDT is the most well known, most widely integrated, and is currently the fourth-largest cryptocurrency in the world by market capitalization.
What are stable coins?
Stablecoins are cryptocurrencies designed to minimize the volatility of the price of cryptocurrencies. While marrying the benefits of blockchain technology and traditional currency. These assets are typically pegged to either another cryptocurrency, fiat money (conventional money), or to exchange-traded commodities.
Generally speaking, investors need not worry about high volatility when it comes to fiat-backed stablecoins such as the USDT. The same way they do not have to worry about the value of the US dollar going to zero overnight.
There are different types of stablecoins. Some, such as Tether Gold, are digital assets following gold. According to the company, each token represents one troy fine ounce of gold on a London Good Delivery bar.
What influences the Tether price (USDT)?
So what influences the.Tether Price? To understand this is to understand what influences the price of the US dollar. Here are the three main factors that affect the price of the US dollar.
1. Supply and demand
When the United States sells products and services to buyers overseas, these buyers will need to pay for these goods and services using the US dollar. In order to pay for these goods and services using the US dollar, they will first have to acquire this currency by converting their local currency into the US dollar.
In doing so, these buyers would effectively be buying US dollars, thus increasing the demand for this currency. And what do we know about demand and supply? When there is an increase in demand, there is less supply, which then leads to an increase in value of the asset in demand.
When else might the demand for the US dollar increase? Perhaps when there is a global economic crisis when investors prefer to sell other assets and park their money in cash (i.e. the US dollar). Or perhaps when foreign investors are buying up US company stocks, which requires them to acquire these company shares using the US dollar.
2.Market sentiment and psychology
"How does the market look today?" This question drives not only each local and national economy, but also impacts the regional and global economy. Indeed, many business empires were built simply to answer that question. Just look at Bloomberg, CNBC and the Wall Street Journal.
So why do people obsess over market sentiments? Because if the market is feeling down, it suggests that an economy is weakening. When that happens, consumer consumption in said economy may fall and investor confidence might plunge.
When investor confidence falls, there may be a sell-off of US stocks or bonds. And these investors may decide to sell their US dollars and convert it back into their local currency or some other commodity like gold, thus dampening the value of the US dollar.
3.Technical and fundamental factors
There are many other factors, both human and non-human that could affect the price of the US dollar and subsequently the Tether price.
For instance, analysts follow the release of government statistics and reports closely to determine the health of an economy and its future prospects. To do so, there are a few reports that they commonly refer to and that you can keep an eye on too:
a.)Trade balance
The United States' trade balance report is released once every two months around five weeks after the end of the month it references. US Census Bureau and the Bureau of Economic Analyst issue this report.
Generally speaking, when a country is said to have a "trade deficit" it means that the country is importing more than it is exporting, which is viewed negatively. When a country says to have a "trade surplus" it means that the country is exporting more than it is importing, suggesting a rise in the demand of the US dollar.
b.)Nonfarm Payroll and Retail Sales
The Nonfarm Payroll Report is a monthly report published by the US Department of Labour Bureau of Labour Statistics. It essentially provides the data on the number of jobs that have been created or lost each month.
The general understanding is that if there is an increase in the number of jobs created. Then businesses are doing well and consumer consumption is up. Conversely, if the numbers are down, then businesses are not doing well and have therefore had to reduce the number of employees their business employs.
The same goes for retail sales. US Department of Commerce and Census Bureau produce It iand it s tracked through the monthly Retail Sales Report. Strong retail sales suggest a strong economy, and vice versa.
c.)Gross Domestic Product
Gross Domestic Product or GDP refers to the monetary value of all goods and services produced by a country within a particular period. If an economy is doing well, then more people will be consuming, acquiring or using goods and services. Thus prompting greater production and raising a country's GDP.
The United States' Bureau of Economic Analysts releases the country's GDP data approximately one month after the end of each quarter (every three months).
Aside from data from a country's government, other entities such as think tanks and international organizations. Such as the International Monetary Fund (IMF) and the World Bank also publish projections for individual, regional and global economies throughout the year. So keep an eye out for those as well.
How is the USDT doing today? Find out here.
