The crypto markets wrapped up 2024 with a shaky finish, largely driven by fears surrounding Tether (USDT). Speculation over Tether’s compliance with Europe’s MiCA (Markets in Crypto Assets Regulation) led to concerns that it could trigger a market crash. However, prominent crypto analyst Michael Van de Poppe suggests that these fears may be exaggerated.
Tether’s Financial Health Amidst Scrutiny
Tether has long been under the microscope, with critics accusing it of operating in a “bubble” or lacking transparency. Despite such skepticism, Tether reported over $5 billion in net profits for the first half of 2024. This highlights the company’s strong financial health, with Tether claiming to be fully backed and over-collateralized. However, the persistent issue of transparency remains a point of contention.
MiCA regulations impose stringent rules for stablecoins operating in Europe, aiming to ensure investor protection and financial stability. Although Tether has opted not to comply with MiCA, it has invested in the euro-pegged stablecoin issuer, Stably, which adheres to the regulatory requirements. This strategic move allows Tether to focus on markets in the U.S. and MENA regions, avoiding the complexities of European regulations.
Market Sentiment and Tether’s Position
As Europe adapts to MiCA, some exchanges have delisted USDT in favor of competitors like USDC, which has gained market share. While the transition may cause temporary liquidity challenges, experts argue that fears of a market crash are overblown. Instead, the fear-driven selling may provide buying opportunities for altcoins at discounted prices.
Tether’s CEO, Paolo Ardoino, has dismissed competitors’ claims as baseless and reassured supporters that Tether is well-prepared for MiCA. Additionally, crypto lawyer Jonathan Galea pointed out that non-compliance with MiCA does not make Tether illegal but could limit liquidity if enforced too strictly.
Also Read: Tether (USDT) Delisting from EU Exchanges: Is This a Buying Opportunity for Crypto Investors?
Altcoin Outlook for 2025
Van de Poppe sees the current market negativity as an opportunity to accumulate altcoins at cycle lows. He predicts that, despite Bitcoin’s year-end correction, Ethereum shows strong potential for upward momentum, with altcoins like Optimism, SEI, and XRP poised for a rebound. With Tether’s potential compliance challenges overblown, the market is ripe for a reversal in early 2025, creating an ideal entry point for long-term investors.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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