Tether’s New Strategy: A Shift Towards Bitcoin
In a surprising yet strategic maneuver, Tether is opting for a change in its reserve management. This move mirrors the infamous MicroStrategy approach, with Tether committing to bolster its reserves with Bitcoin (BTC) while stepping back from traditional U.S. government debts.
Investment Plans: Monthly Bitcoin Acquisitions
On May 17, Tether declared its ambition to allocate a portion of its monthly profits towards Bitcoin purchases. More specifically, the firm has promised to invest up to 15% of its net realized operating profits into the cryptocurrency. Sounds like a plan, right?
The Numbers Behind the Move
According to Tether’s financial documentation, the company just reported a solid net profit of $1.5 billion. After crunching those numbers, it’s clear why they feel confident pivoting toward BTC. As of Q1 2023, Tether already holds around $1.5 billion worth of Bitcoin, accounting for about 2% of its total reserves. Talk about making a wallet heavier!
Custodianship: Keeping Bitcoin Safe
Interestingly, Tether has chosen to keep all their Bitcoin in self-custody. Who needs trust issues when you can hold the keys yourself, right? With 85% of its overall holdings still anchored in cash and short-term deposits, primarily government Treasury Bills, the company seems to be threading the needle between traditional finance and the burgeoning world of crypto.
Bitcoin as a Safe Bet
Tether executives see Bitcoin as a prime candidate for investment. They tout its historical resilience and meteoric rise over the last decade as reasons for their bullish stance. According to Paolo Ardoino, Tether’s chief technology officer, Bitcoin’s limited supply and decentralized essence make it appealing to both institutional and retail investors. Let’s not forget: demand begets value!
Comparing Paths: Tether vs. MicroStrategy
It’s hard not to draw a comparison with MicroStrategy, which has also been shifting its reserves towards Bitcoin over the U.S. dollar. However, they’re a bit less structured in their journey, lacking a fixed timeframe for their investments. Meanwhile, Tether seems to be executing its strategy with some punctuality—purchasing Bitcoin at the end of each month. For those keeping score, it looks like Tether might have a competitive edge.
