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The Intraday Bitcoin Response to Tether Minting and Burning Events: Asymmetry, Investor Sentiment, and “Whale Alerts” on Twitter

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  • Saggu, Aman

Abstract

Tether Limited has the sole authority to create (mint) and destroy (burn) Tether stablecoins (USD₮). This paper investigates Bitcoin's response to USD₮ supply change events between 2014 and 2021 and identifies an interesting asymmetry between Bitcoin's responses to USD₮ minting and burning events. Bitcoin responds positively to USD₮ minting events over 5- to 30-minute event windows, but this response begins declining after 60 minutes. State-dependence is also demonstrated, with Bitcoin prices exhibiting a greater increase when the corresponding USD₮ minting event coincides with positive investor sentiment and is announced to the public by data service provider, Whale Alert, on Twitter.

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  • Saggu, Aman, 2022. "The Intraday Bitcoin Response to Tether Minting and Burning Events: Asymmetry, Investor Sentiment, and “Whale Alerts” on Twitter," Finance Research Letters, Elsevier, vol. 49(C).
    • Handle: RePEc:eee:finlet:v:49:y:2022:i:c:s154461232200321x
    DOI: 10.1016/j.frl.2022.103096
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    Cited by:

    1. Jean Barthélémy & Paul Gardin & Benoit Nguyen, 2023. "Stablecoins and the Financing of the Real Economy," Working papers 908, Banque de France.
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    3. Dorien Herremans & Kah Wee Low, 2022. "Forecasting Bitcoin volatility spikes from whale transactions and CryptoQuant data using Synthesizer Transformer models," Papers 2211.08281, arXiv.org.
    4. Yu‐Lun Chen & J. Jimmy Yang, 2024. "Time‐varying price discovery in regular and microbitcoin futures," Journal of Futures Markets, John Wiley & Sons, Ltd., vol. 44(1), pages 103-121, January.

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    More about this item

    Keywords

    Bitcoin; Tether; Asset Pricing; Market Efficiency; Stablecoins; Event Studies;
    All these keywords.

    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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