On several occasions, we have analyzed these two major cryptocurrencies. Bitcoin which is the premier cryptocurrency and Tether the pioneer of the stablecoins.
We have treated them as independent entities of each other, behaving autonomously, only being affected by shocks in the market in general.
However, financial analytical firm FilbFilb through a study realized a relationship, allowing to establish a prediction model. The company that specializes in analyzing the crypto market has put forward an analysis that we would be looking at from a critical point of view.
They realized that a relationship can be established between Tether’s total offer and the price of Bitcoin, assuming that both are similarly affected by market shocks.
This is highlighted it in the following graphic:
Subsequently, they apply a correction of the variable, making an anchor, that is, anchoring the difference between the exchange times of Bitcoin and Tether and obtained a correlation as follows:
It can be seen that the behavior of both variables are similar, so they decided to build a model where both variables are related, being private due to copyright issues. When performing the analysis, they concluded that there is a correlation of 0.89, that is, almost perfect.
However, they highlight some problems that are not considered within this model, which could affect the result of the model:
The Tether/Bitcoin analysis depends solely on 236-day data and the correlation is not a pure causality determination.
Like other stablecoins, issued Tethers could burn at any time.
More Tethers could be printed at any time, and the USDT does not represent the entire cryptocurrency offer in the crypto market. In addition, Tethers are used for more than just buying Bitcoins.
If the market capitalization of Bitcoin continues to grow, the formula and analysis will require an adjustment. The impact of the current issuance of 1,000million Tether on a Bitcoin market capitalization of $70 billion will have a different impact on a Bitcoin market capitalization larger or smaller.
With this information, using the model the financial analytics firm decided to try to estimate the price of Bitcoin in the future, using as an estimator the amount of Tethers in the market.
The result showed that if it is possible to increase one billion Tethers, there is the possibility that Bitcoin reaches a price of $20,000.