Binance: Adjustment to the Daily Interest Rate for USDT
Been getting a lot of emails from Binance recently?
This is my 8th one this week.
Lets explore what these mean, and their importance within the context of the current market. First, I want to make clear that this is merely a second opinion from strangers on the internet, and should not be construed as financial advice.
How it affects YOU.
This part is relatively easy to understand.. If you are borrowing US Dollar Tether (USDT) to go LONG onto a margin pair, then you have been paying more and more interest to do so. The outcome of this is a higher cost to utilize their margin service. This is occurring because of such high demand for the Tethers, which are are running out at an alarming rate! Numerous times I have gotten the following message:
With recent changes, it has increased from 0.027500 to 0.055000% charged daily. This is a bigger scam that what the US Federal Reserve is doing!
Just kidding. That isn't possible. Moving on..
Why are Binance doing this?
This is an attempt to increase the velocity of Tether. The velocity of a currency is defined as the frequency of its use within the context of its uses. Tether is a stable coin pegged to the USD. Bitcoin valued in Tether (BTC/USDT) is the number one cryptocurrency when comparing traded volume. Naturally it is in Binance's best interest for their traders to frequently buy/sell on their platform. This is where their fees will take another flat % from the orders finalized.
Now that the market has seen some volume there is a high demand for the US Dollar stablecoin. Since it is a common point of entry for all of their margin pairs, it has become the central bottleneck on their platform. There has not only been a lack of Tether available, but it is costing much more to borrow it. Almost double the price, and that is only within one week of serious bullish momentum across the sector.
What does this mean for the market?
Attune to what I said just now, this Binance failure has only presented itself within the last couple weeks. Coincidentally this when the market has seen strong buying pressure and the (apparent) unsustainable demand for Tether began. Clearly if Binance cannot lend enough Tether to satisfy the current market, there is a massive demand to what was present earlier in 2020 and even years before that. Thus calls into question their ability to effectively fund their very large margin demand.
Extrapolating on that idea..
Look at the buy volume we have seen since the start of 2020 (bottom right). This outpaces what we saw for a majority of 2018 and a significant portion of 2019. This data was cross checked across different exchanges, and the same trend presented itself. Consider the importance of this bullish volume observation paired with the absolute increase in demand for USDT,
Just another reason we're bullish as ever for 2020 and beyond. Don't get left behind, join Performante to get the upper edge you need.