The Impact of Tether Grants on Bitcoin

11 Pages Posted: 14 Jun 2018

See all articles by Wang Chun Wei

Wang Chun Wei

University of Queensland - Faculty of Business, Economics and Law; University of Queensland - Finance

Date Written: May 9, 2018


In recent years, Tether issuances (or 'grants') have increased significantly, which correlated broadly with a significant rise in Bitcoin valuation. This paper examines the impact of cryptocurrency issuances on subsequent cryptocurrency returns. It is argued that as Tether is the undisputed 'stable coin', the minting of new Tether acts similarly to monetary expansion in cryptocurrency markets, inflating the prices of Bitcoin. We construct a VAR model and show contrary to investor expectations, Tether issuances do not impact subsequent Bitcoin returns, however, they do impact traded volumes. We also document an increase in Tether trading following a subsequent decrease in Bitcoin returns. This illustrates investor preferences for lower volatility crypto-assets in periods following negative Bitcoin returns.

Keywords: Bitcoin, Tether, Cryptocurrency

JEL Classification: C01, G12, G14

Suggested Citation

Wei, Wang Chun, The Impact of Tether Grants on Bitcoin (May 9, 2018). Available at SSRN: or

Wang Chun Wei (Contact Author)

University of Queensland - Faculty of Business, Economics and Law ( email )

4072 Brisbane, Queensland

University of Queensland - Finance ( email )


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