Bitcoin Investment Boost: Tether Joins the Reserves Revolution for Prolonged Value and Stability
Tether, the company responsible for the popular Tether stablecoin (USDT) with a value pegged to $1.00, is taking inspiration from MicroStrategy by diversifying its reserve management strategy.
The stablecoin issuer has announced plans to bolster its reserves by incorporating Bitcoin (BTC) into its portfolio and moving away from US government debts.
In a recent announcement on May 17, Tether disclosed its intention to invest a portion of its profits into Bitcoin on a monthly basis. The company stated that it will allocate up to 15% of its net realized operating profits for purchasing Bitcoin on a regular basis.
This move comes shortly after Tether’s quarterly financial report, where it reported net profits of $1.5 billion.
Tether has confirmed that it will retain full control and custody of its Bitcoin holdings. As of the end of the first quarter of 2023, the company currently holds $1.5 billion worth of Bitcoin, accounting for approximately 2% of its total reserves.
The remaining 85% of the reserves are composed of cash, cash equivalents, and other short-term deposits, primarily Treasury bills, according to Cointelegraph.
Tether has justified its decision to invest in Bitcoin (BTC) by highlighting the cryptocurrency’s proven track record as a long-term store of value.
The stablecoin issuer pointed out Bitcoin’s significant price appreciation over the past decade and its resilience in the face of traditional financial system failures.
Tether Chief Technology Officer Paolo Ardoino emphasized that Bitcoin’s qualities, such as its limited supply, decentralized nature, and widespread acceptance, make it an attractive investment asset for both institutional and retail investors.
Drawing a parallel, MicroStrategy also follows a Bitcoin investment strategy, actively replacing the U.S. dollar with Bitcoin in its reserves.
While MicroStrategy does not have a set timeframe for its BTC investments, Tether plans to allocate a portion of its profits to Bitcoin at the end of each month.