As part of a new investment strategy centered around the worlds largest cryptocurrency, stablecoin issuer Tether stated on Wednesday that it will begin regularly buying Bitcoin (BTC) for its stablecoin reserves.
Tether has stated that it will allocate up to around 15% of the income realized from investments to the acquisition of BTC and will add tokens to its excess reserves. However, the stablecoin giant excludes any unrealized appreciation of its reserve assets from this calculation.
Based on the statement released by the firm, Tether will not use any third-party custodian as it plans to keep all its Bitcoin holdings under its own custody.
The announcement comes just days after Tether reported a net profit of $1.5 billion for the first quarter, which accounted for about 2% of its reserves. An estimated 85% is held in cash, cash equivalents and other short-term deposits, the majority of which is in the form of Treasury bills.
Assuming that the net profit remains the same, this means that the firm will buy about 74M USD worth of BTC or about 2775 BTC every month in the future.
In addition, Tether thinks that Bitcoin is an excellent investment opportunity because it has a history of impressive returns over the past decade and has proven to be a long-term store of value. The value of the major cryptocurrency has increased by around 22,000% over the past decade as it currently stands, the price of BTC is hovering around $26,681 which represents a decrease of 1.14% in the last 24 hours.
