Tether’s recent disclosure about the stablecoin’s reserves may have contributed to the altcoin selloffs last week, as claimed by the The founder and CEO of Avanti Financial.

Tether Holdings Limited’s breakdown of Tether’s (USDT) reserves were not invested in “short-term, lower-risk, liquid securities,” but rather credit assets of “who-knows-what quality.” According to series of tweets by Caitlin Young. Given that the stablecoin — ranked sixth with a $58 billion market cap — has the potential to bring down other tokens amid a credit market correction, traders may have felt compelled to sell other cryptocurrencies to reduce their total risk exposure, according to the the Avanti CEO

“If Tether stays a de facto credit hedge fund by investing reserves this way, markets now can safely predict that Bitcoin and crypto prices will likely exhibit high correlation with credit markets,” said Long. “They will probably correct together.”

Long added that authorities may still choose to crack down on stablecoins following Tether’s full reserve breakdown, but said the crypto industry could benefit from regulatory clarity:
“One of the best things for industry at present would be getting stablecoins to be okay with U.S. regulators, especially the Fed and the SEC. Stablecoins are very important bridges between crypto and the U.S. dollar.”

Credit - TestBoo.com - https://testboo.com/crypto/the-real-reason-people-are-selling-crypto-revealed-by-caitlin-long/