So some people have been speculating that Tether or Bitfinex have been printing money out of thin air which pushed the price of bitcoin from 600$ to 20k$. Bitfinex indeed is printing 100 million every couple of days, even during the fall of bitcoin by almost 50%, which is unexplainable. Source : twitter.com/tetherprinter?lang=en
Well Tether responded to these concerns by hiring a company to check their history and audit everything in May of 2017.
Today news came out that Tether dissolved their relation or stopped working with the auditor for whatever reasons that are not published yet. This is a really bad sign. After this news came out people in Gdax started selling bitcoin to stay in USD incase of crypto market crash
People in Bitfinex and other USDT based exchanges bought Bitcoin with their USDT in case USDT crashes (so the concern is that 1 USDT might not be equal to 1 USD) So they are trying to buy coins, then send these coins to exchanges that support USD which ofc pushes the price up.
So people in Gdax are selling - price of BTC went down
People in Bitfinex are using their USDT to buy - price of BTC went up
Thats why there is almost a difference of 500$ between Gdax (USD) and other USDT exchanges.
USDT - USD actually fell down hard then partially recovered as can be seen in the following chart
Personally, I moved all of my funds to Gdax and then to USD in case of a market crash.
Be careful!
*Not telling you to sell, not telling you to buy, not saying that the market will crash, not saying that we are bullish. Just presenting to you the current situation.
If I may, I am surprised that you FUD so much. 2 bln USDT, that is nothing put into in BTC mkt cap. if all USDT were to be minus, BTC price would drop less than 1,000$. Prove me I'm wrong
DCFreak
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@Ant1ether, you dont understand the issue. You need to do your own research.
It's much much bigger than 2 bln.
But just a simple answer (this is not even the reason why it's a big deal) most exchanges use usdt except few that use USD like coinbase, so if usdt goes to 0 people in these exchanges won't be buying BTC everybody will be sending BTC to use exchanges and panic sell.
Again do your own research but the way people think tether pushed BTC from 600 to 20k is in the following way, you place a a buy order with 1 million usdt(which is worth nothing) at 5k USD which makes people feel safe and buy in at 5.1k$ you then moved the buy wall to 5.2k people buy in at 5.3k then you move it to 10k$ some people will sell but others will buy in more.. etc you keep doing that all the way up which pushes the market cap 100x with a small amount of money. So these 2 billions or whatever can push a market to a trillion market cap.
I'm sleepy and using my phone so I might have screwed everything up but regardless you need to read and understand the situation on your own.
Ant1ether
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@DCFreak, I really appreciate that you took so much time to answer me. I do understand your "fear" but buy and sell walls are part of any markets. it is a well known fact that the market is sometimes pushed by the demand or pulled up by offer and that whales can have a fluctuation impact. That is why the market has corrections, consolidation phase, etc... And so you can do your own research USDT is backed, external auditors have seen the accounts and both Bitfinex and Tether are legit in their accounting. As much as I like conspiration theories, this one is old and has been treated many times. Your one second search is like anyother one second research. Just one question. Do you really believe that corporations like CME would invest in a market for which they haven't all datas ? Do you think they would risk everything ? They have all the reasons to know USDT is acked and they are very aware about what drives the market and its full history.
I wish you don't fud much after doing more research. Happens to all of us to lose our temper.
diegofnu
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@Ant1ether, CME doesnt have any bitcoin investing instruments. The futures contract is traded in dolars not bitcoins. They shorted the bitcoin price and they won a lot of money aparently.
kaylbee
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@Ant1ether, The issue is that tether has NOT been audited. Friedman was doing the audit but is no longer, which is generally a bad sign when an auditor doesn't finish the audit. Bitfinex is not based in the US, so they don't have to be upheld to US standards. Again, tether has not been audited. And a 500B market cap doesn't mean that people have put in 500B. If that were the case, then 2B wouldn't matter that much. Moving your money to USD is simply a precaution if tether is found out to be worthless. Plus, the price could drop quite a bit and then that means you have dollars to buy in a very good price through all the panic selling that would be happening.
@DCFreak If Tether never got an audit, then wouldn't it never get exposed IF they didn't have the backing funds?
kaylbee
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@Ant1ether If you look up tether discussions on reddit.com/r/btc you'll see why it could affect the markets a larger amount than 2B/500B, but I think even if the worst happens, the markets will eventually recover. Simply calling it FUD doesn't mean anything because everything is FUD until it's happening and too late to get out. Months before Mt. Gox declared bankruptcy, people were yelling at other people that they were just spreading FUD.
Also, Friedman withdrawing from the audit doesn't necessarily mean they don't have the funds. Friedman could've stopped because of lack of transparency or other reasons. This could mean that while having full funds, Tether/Bitfinex might be up to other things or maybe they're not. The point is, we don't know, but that doesn't mean we can't take precautions.
bwang221
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@DCFreak, would the opposite be true? people would spend all their USDT to buy BTC and send to exchanges like coinbase?
kaylbee
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@bwang221, There would probably be panic selling, which would cause the market to fall, which would cause more panic selling because people are uncertain and watching the price fall. Everyone who is slow to get rid of their tether would get burned, and would cause a lack of confidence in the market. I think the market would recover though because people that didn't get burned are going to buy up at a cheap price and blame the people for holding tether in the first place.
josephtse
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@DCFreak, Um, isn't this how the regular stock market works? say, 100 trillion USD M2 money supply. US government decides to print 10 trillion more. Use that to pump into the stock market, push buy and sells walls up 20%. Market collectively goes up 20% higher. Same deal. So what's the big deal. Isn't this how all leveraged markets work? That is why global money supply just increases and increases.
Nidalas
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@josephtse, The difference is that there is consequences for the stock market. Doing that increases inflation by devaluating the USD by a lot, which creates instability in the general population. Also, if one of the chainlink fails, all fail, as we saw in 2008