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Renowned cryptocurrency analyst Willy Woo has hinted at the possibility of a Bitcoin (CRYPTO: BTC)-backed stablecoin from Tether (CRYPTO: USDT) in the future.
What Happened: In a post on Tuesday, Woo praised Tether, the company behind the world’s biggest stablecoin by market cap, for their innovative business idea of issuing a stablecoin over collateralized with gold.
In fact, Woo went one step further and forecasted that the firm might even launch a stablecoin backed by Bitcoin in the future. “Given Tether is building a sizeable BTC treasury, I would not be surprised in a future where they issue bUSDT, backed by Bitcoin,” Woo wrote.
Woo admitted that such an initiative will be unviable in the present due to bear market-induced downturns, but hoped that future cycles, when Bitcoin will have a much bigger market cap and less volatility, can make it possible.
Why It Matters: Tether’s latest move to launch a gold-backed stablecoin represents a significant shift in the company’s strategy.
Traditionally, Tether’s USDT stablecoin has been backed by cash and cash equivalents. However, the new offering allows for the creation of tokens using Tether Gold (CRYPTO: XAUt) as collateral, a tokenized version of gold.
Woo’s suggestion of a Bitcoin-backed stablecoin indicates a potential future direction for Tether. However, one must not lose sight of dangers of backing a stable with a volatile assets like cryptocurrencies, the ugliest manifestation of which came during the stunning collapse of stablecoin TerraUSD (CRYPTO: UST) and its reserve cryptocurrency Terra (CRYPTO: LUNA)
Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
