According to a report from JPMorgan, Tether may need to sell Bitcoin and other commodities to reach compliance with proposed US stablecoin rules. CEO Paolo Ardoino disputed this on social media but didn’t address the core concerns.

The US is pushing strongly for new stablecoin regulations, which would include strict accounting and secured reserves. Tether didn’t comply with similar regulations in Europe, but it can’t afford to lose the US market.

Will Tether Have to Sell its Bitcoin?

Tether, the world’s leading stablecoin issuer, achieved a succesful financial year in 2024 despite regulatory challenges. Last quarter, the firm reported record-high profits, and it’s opening new market opportunities with a relocation to El Salvador.

However, a JPMorgan report claims that Tether may have to sell a lot of its Bitcoin, and its CEO fought back immediately:

“JPMorgan analysts are salty because they don’t own Bitcoin. Tether analysts say that JPMorgan does not have enough Bitcoin!” Tether CEO Paolo Ardoino said via social media.

The analysts identified that the new US stablecoin regulations will compel Tether to offload its Bitcoin reserves. Several stablecoin bills are currently proposed to the Senate, and most of them advocate for issuers to hold their asset reserves in the US.

The most likely bill be passed is Tennessee Senator Bill Hagerty’s ‘the GENIUS Act’. The bill’s standards show that only 83% of Tether’s reserves are in compliance, and other proposed bills are more aggressive.

Putting aside the question of Tether’s Bitcoin holdings, it seems clear that US stablecoin regulation is coming. These efforts have bipartisan support, and Federal Reserve Chair Jerome Powell strongly supports them, too. If both Congressional factions and the regulatory apparatus want this, some version of it will likely come to pass.

Why would these proposed regulations compel Tether to sell its Bitcoin? Essentially, they would entirely change the way the company handles its reserves. The company would need to store a significant portion of its total cash reserves in US Treasury bonds or other insured institutions.

In short, this framework doesn’t entirely support the decentralization of stablecoin issuers.

Last December, it was largely kicked out of Europe because it could not meet similar requirements under the new MiCA framework. Tether could handle losing the EU, especially because it prepared, but US crypto exchanges are also ready to drop the company if required.

In short, Ardoino’s social media outburst attracted some attention, but it’s practically an impractical response to the impending crisis. Tether may need to sell a lot of its Bitcoin, and even that might be enough.

Analysts have pointed out that the firm has fervently resisted close scrutiny of its reserves. New transparency requirements could reveal some ugly secrets.

Chainlink (LINK) has struggled to maintain momentum after a failed attempt to breach the $26 resistance level towards the end of January. This setback triggered a decline, causing LINK to fall below the $20 mark. 

For a meaningful recovery, Chainlink now relies on the actions of its investors to make the right moves.  

Chainlink Investors Have An Opportunity

Currently, Chainlink’s active addresses have dropped to a two-month low of 3,400, a figure not seen since November 2024. This decline in active users indicates a waning interest from investors, as fewer participants are conducting transactions on the network. This suggests that the sentiment among LINK holders is largely skeptical.  

The reduction in active addresses signals that many investors are adopting a wait-and-see approach, likely due to the recent price struggles. This lack of engagement and hesitance could further weigh on Chainlink’s price, as diminished transaction activity tends to correlate with limited upward momentum in the market.  

Chainlink’s broader momentum is also under pressure, as reflected by the Market Value to Realized Value (MVRV) ratio, which is currently at -15%. This means that those who bought LINK in the last month are facing losses of 15% on average. The MVRV ratio is now in the opportunity zone, between -8% and -19%, signaling potential for a reversal.  

Historically, when the MVRV ratio dips into this range, it suggests that investors are halting sales and instead choosing to accumulate at lower prices. If this pattern continues, it could mark a turning point for Chainlink’s price, as long-term holders may step in to provide support and drive price recovery.  

LINK Price Prediction: Bouncing Back

Chainlink’s price has fallen by 25% since the beginning of the month, currently trading at $18.84. The altcoin has been struggling to break above the resistance at $19.23 for the past week, which indicates a crucial level that must be breached for a potential recovery.  

If investors begin to accumulate LINK at these lower prices, there is a strong possibility that the $19.23 resistance will be flipped into support. This could push Chainlink toward the next barrier at $22.03, providing the momentum needed for further price gains.  

However, if the breach of $19.23 fails, Chainlink could fall through its downtrend support line, hitting $17.31. A drop below this level would invalidate the current bullish outlook, signaling a continued bearish trend for LINK and possibly triggering further declines.