Tether’s Effect on Bitcoin’s Price

Tether (USDT) is a controversial cryptocurrency. Tether, the company behind the currency, claims that 1 USDT is equivalent to 1 US dollar. But that is not always the case. When Tether prints or revokes USDT, USDT rises or falls against the dollar. Our chart documents significant changes in the USDT supply and their correlation to the price of Bitcoin.

Tether Premium and Bitcoin Price

Tether, or USDT, is a cryptocurrency token whose value is supposed to mirror the value of the United States dollar. The USDT price premium is the percentage by which real time USDT prices on exchanges exceeds (or falls shorts of) one US dollar. As you can see in the accompanying chart, a large positive USDT price premium trends to signal a coming rise in the price of the Bitcoin. Meanwhile, a negative price premium may signal a fall in Bitcoin prices. Bitcoin prices are difficult to predict, but if you are inclined to try, USDT price premiums are one more factor that you may want to take into account.

Return Correlation on Cryptocurrency Pairs

This chart figure shows the minute-to-minute return correlation of each pair of cryptocurrencies during the day. The number in each circle is the correlation coefficient of the two cryptocurrencies on the x and y axis. A perfect positive correlation (a correlation coefficient of +1) implies that the return of two currency pairs will move in the same direction 100% of the time. A perfect negative correlation (a correlation coefficient of -1) means that the the return of two currency pairs will move in the opposite direction 100% of the time.

Risk-Reward Ratio of Assets

This chart shows the Sharpe ratio (risk-return ratio) of various cryptocurrencies over the last 30 days. Blue means that risks outweigh rewards, and pink means that rewards outweigh risks.

How Twitter Felt About Bitcoin

1. We used deep learning to do tweet-level sentiment analysis. The sentiment score measures the average attitude of Bitcoin-related tweets over the past 7 days, ranging from positive or negative. The score is computed by averaging the score of new tweets that mention the word "Bitcoin" every hour. A score of +1 is the most positive, while a score of -1 is the most negative.


2. Sentiment magnitude measures the average intensity of feeling in Bitcoin-related tweets over the past 7 days, ranging from indifferent to passionate.