Will Europe’s Tether Ban Trigger Crypto Market Crash?

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As a seasoned financial analyst with over two decades of experience in various markets, I have seen my fair share of market turbulence and regulatory changes. The upcoming Tether Ban in Europe is undoubtedly one of those events that could potentially shake the crypto market to its core.

In contrast to when Donald Trump pledged to establish America as the leader in cryptocurrency, Europe chose a distinct route by imposing a ban on Tether (USDT). Tether, being the largest stablecoin, is often preferred for crypto transactions because its value is tied to the U.S. dollar. Yet, there’s a potential risk that this very stablecoin could cause a crash in the crypto market.

Will Tether Ban Result In Crypto Market Crash?

The fact that Tether has not followed Europe’s MiCA regulations for stablecoins could lead to significant issues for them. Under MiCA guidelines, stablecoins such as Tether must possess an e-money license in order to trade on cryptocurrency exchanges. However, USDT missed its deadline, increasing the likelihood of a Tether ban within Europe, potentially leading to its removal from numerous crypto exchanges by December 30, 2024.

The recent news about Tether might negatively influence the cryptocurrency market because of its significant role in the market. Currently, it ranks third after Bitcoin and Ethereum, with a market capitalization of approximately $139.28 Billion. Moreover, given that it is the most commonly held asset, changes to its status will likely have a substantial impact.

Significantly, this removal may lead to significant liquidity problems, potentially causing crypto market collapses similar to a crash, given that investor sentiment is already shifting from greed. This action will also influence USDT pair trades, crypto transactions, and crypto trading fees. In the long run, this could result in a severe lack of liquidity within the crypto market, leading to a potential market crash.

Primarily, this move aims to diminish its market control, which has been gradually recovering since it found support in March. This decrease might contribute positively to the rise of Bitcoin prices, as there’s a inverse relationship between them.

Tether Is Like A Ticking Bomb

Apart from the recent announcement of Tether’s ban, financial expert Jason highlighted the issue of Tether’s minting process in a recent post. In essence, he pointed out that Tether hasn’t minted any new tokens for more than two weeks. Moreover, Jason has warned that Tether functions as a crucial component within the crypto market, but it also resembles a time bomb that could potentially detonate with the impending Tether bans and exchange removals.

It’s worth noting that despite being banned in various regions, Tether continues to lead the market, but it faces significant criticism. Justin Bons referred to Tether as a $118B scam, while Jason Calcanis, a well-known VC, labeled it as the norm for shady transactions. In fact, he raised concerns about its operation, pointing out that it has yet to pass any thorough audit by a reputable firm.

On the other hand, while the drama surrounding cryptocurrency was prevalent, the CEO of Tether exhibited optimism, expressing it through a “Rocket” emoji in response to the FUD (Fear, Uncertainty, and Doubt) about Tether. In Jacob’s Tickling Bomb post, he expressed his thoughts as follows:

As a crypto investor, I may come across as being either baffled like a donkey trying to operate a complex machine, such as a microwave, when it comes to understanding the world of Tether, or perhaps I’m just envious that this digital currency isn’t controlled by my inner circle.

What Tether Ban Means For Crypto Investors?

The ban on Tether will significantly affect European investors as they will no longer have access to the largest stablecoin in the cryptocurrency market. This decision could also pose challenges and potential liquidity issues for crypto exchanges. Globally, the removal of USDT from December 30 could lead to a situation similar to a market crash. Critics have voiced concerns about Tether’s lack of audits, labeling it as a $118B scam. However, the Tether CEO remains optimistic, viewing these criticisms as a positive sign for their token.

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2024-12-27 18:48