Bitcoin Jumps as Cryptocurrency Traders Wobble on Tether ‘Stablecoin’

Bitcoin’s value jumped by almost 9% at one point on Monday, as investors fled the so-called stablecoin Tether.

Tether tokens are supposed to be tied to the U.S. dollar, with the eponymous company behind them claiming that it has a dollar in its accounts for each token it issues. There is no conclusive evidence to support this claim, but the token is still often used as a dollar substitute for trading purposes, as they are more easily transferred between exchanges than dollars are.

Some have long suspected that the Tether operation is being used to buy a load of Bitcoins for nothing, effectively propping up the value of Bitcoin. It so happens that Tether and a major cryptocurrency exchange called Bitfinex share the same CEO, and Tether sends all its freshly minted tokens to Bitfinex. When they get there, the price of Bitcoin tends to go up, suggesting Tether tokens are being used to buy Bitcoins.

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