Will Crypto Recover In 2021 - Here’s Is The Reason For The Low Cap Altcoins Crash

Caitlin Long, the CEO of Avanti Bank & Trust, which specializes in digital assets, revealed a stunning revelation about the world's largest stablecoin in a lengthy series of tweets.

It turns out that the majority of the US dollars used to back the stablecoin Tether are actually “commercial paper.” This was a big surprise because commercial paper is a riskier investment than Treasury bills.
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Caitlin Long mentioned in a series of Saturday tweets that Tether Holdings Limited's allocation of Tether's (USDT) reserves was not invested in "short-term, low-risk liquid securities," but rather in "who knows what quality" credit assets.

​According to Avanti's CEO, traders may have felt pressured to sell other cryptocurrencies in order to reduce their total risk exposure, given that stablecoin – which is ranked sixth with a market cap of $ 58 billion – has the potential to lower other tokens during a credit market correction.

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“If Tether remains a de facto credit hedge fund by investing reserves in this way, the markets can now safely predict that Bitcoin and crypto prices are likely to exhibit a strong correlation with the credit markets,” said by Caitlin Long. “They’ll probably correct together.”

Caitlin Long added that authorities could still choose to crack down on stablecoins after Tether’s full breakdown of reserves, but said the crypto industry could benefit from regulatory clarity:
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“ONE OF THE BEST THINGS FOR THE INDUSTRY RIGHT NOW WOULD BE GETTING THE STABLECOINS TO AGREE WITH US REGULATORS, ESPECIALLY THE FED AND THE SEC. STABLE COINS ARE VERY IMPORTANT BRIDGES BETWEEN CRYPTO AND THE US DOLLAR.”

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