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Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

nytimes.com

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Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#41

Post by craigc »

yifanl wrote: post #29
craigc wrote: post #27

I am fully prepared to receive negative points for this comment, but I do not believe there is anything new here. This narrative has been pushed by the media for almost a year now. The article even claims: > This method is not conclusive, but it has helped government authorities and academics spot suspicious activity in the past. I haven’t read the entire 66 page report yet, but assume for a second that the relations…

The issue with using Tethers to pump up the price is that it implies there's billions of U.S. dollars backing up that Tether. If there isn't billions of USD to be found then... what? The USD pumping up the stock market is undeniably there, but if the Tether pumping up BTC isn't real (real being defined by the 1 USDT = 1 USD), then the price is essentially being pumped up by nothing.

But the article and report do not prove that Tethers are not backed by USD. In fact, it constantly says, “If Tether is not fully-backed by dollars”. All it definitively claims is that Tethers were used to buy Bitcoin when the Bitcoin price fell last year.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#42

Post by ceejayoz »

craigc wrote: post #41
yifanl wrote: post #29

Earlier quoted context omitted.

The issue with using Tethers to pump up the price is that it implies there's billions of U.S. dollars backing up that Tether. If there isn't billions of USD to be found then... what? The USD pumping up the stock market is undeniably there, but if the Tether pumping up BTC isn't real (real being defined by the 1 USDT = 1 USD), then the price is essentially being pumped up by nothing.

But the article and report do not prove that Tethers are not backed by USD. In fact, it constantly says, “If Tether is not fully-backed by dollars”. All it definitively claims is that Tethers were used to buy Bitcoin when the Bitcoin price fell last year.

There's exceedingly strong evidence Tethers are not backed by USD - the Tether website claims "frequent professional audits", but they never completed their first one, were fired by their auditor, and cited a document explicitly stating it was "not intended to be, and should not be, used or relied upon" as proof of their reserves.

It's a demonstrably fraudulent claim right there on their home page.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#43

Post by Nursie »

deltateam wrote: post #36
kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

Right, its been the argument for the past year in the crypto space, and this is because of a lack of transparency from Bitfinex, which is the right move for Bitfinex. Many people are just assuming the worse, as they have no proof for the best case or the worst case. Every OTC desk I talk to always brags about how much demand there is for large buy orders, especially during the dips. If Bitfinex's Tether works as crea…

> IF current cryptocurrency owners are storing value in Tether so they they don't lose money, then more Tether's should be printed.

Why ?

Tether is supposed to be printed when (and only when) new dollars are given directly to them.

If cryptocurrency owners want to store value in tethers, they must buy existing tethers with their cryptocurrency. That's how this is supposed to work.

If more tethers are printed to fulfil demand for tether by people wanting to sell cryptocurrency, then the peg they claim to have (1:1 backing) is a lie.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#44

Post by sctb »

ejstronge wrote: post #4

Could we change the title to that of the article, "Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say"? It currently implies that the New York Times did independent research ("NYT and UT Austin: Bitcoin Prices Manipulated by Tether and Bitfinex") which does not seem to be the case. I think this is a subtle point but, with the tension surrounding 'fake news', it's critical to distinguish reporting on…

Yes, updated. Thanks!

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#46

Post by thisisit »

craigc wrote: post #27

I am fully prepared to receive negative points for this comment, but I do not believe there is anything new here. This narrative has been pushed by the media for almost a year now. The article even claims: > This method is not conclusive, but it has helped government authorities and academics spot suspicious activity in the past. I haven’t read the entire 66 page report yet, but assume for a second that the relations…

> The math regarding Bitcoin’s price increase is actually pretty sound, and I encourage anyone who disagrees to read this article:

https://medium.com/the-crypto-times/why-is-everyone-investin....

The article doesn't prove the math is sound except quote some people about price prediction and talk about how pricey bitcoin will get because population, gold market size etc.

And then it also misses why people don't invest in bitcon. It has nothing to do with Kanehman's psychological studies etc but because people still don't understand what is the use case of a bitcoin.

Additionally, it is these kinds of poorly written articles used as proof which dissuade people even more because the narrative is - if prices are going up then it must be good. I am sure many said something similar about housing prices in 2005.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#47

Post by Nursie »

mkirklions wrote: post #18
seibelj wrote: post #9

Earlier quoted context omitted.

By printing money to prop up the price, you accomplish 2 things. One is that you can sell your crypto for USD if you are a large holder. The second is that you can acquire crypto for free because you created dollars (tether) out of nothing, and hold for the long term.

>The second is that you can acquire crypto for free because you created dollars If someone pays bitfinix for tether, what makes this 'created'? I dont use tether because it is fiat currency which is exactly why I bought Bitcoin- but I dont see the big deal either. Its easier than cashing out to USD. Is tether real or fake? Who knows, I only trust Bitcoin.

> If someone pays bitfinix for tether, what makes this 'created'?

If someone pays actual USD for tether than that's how it's supposed to work - tether puts the USD in the bank, that person gets the tokens.

However if someone wants USDT for their BTC (or whatever) and tether whip up a bunch of USDT to satisfy that, then they are creating an unbacked token to buy other crypto currency with, inflating the market.

> Is tether real or fake? Who knows

That's the problem, they claim transparency, audits and all sorts of other stuff, but they're lies. So nobody knows. But if it is all fake, then fake money could represent a large proportion of the money flowing into cryptocurrencies.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#48

Post by j-c-hewitt »

ceejayoz wrote: post #33
kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

> Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. That's silly. Ponzi-style schemes have been around since at least the late 1800s.

That's also the regular banking system. It's interesting that holders of lots of assets from different angles converged on a similar method for propping up the value of their assets.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#49

Post by craigc »

ceejayoz wrote: post #42
craigc wrote: post #41

Earlier quoted context omitted.

But the article and report do not prove that Tethers are not backed by USD. In fact, it constantly says, “If Tether is not fully-backed by dollars”. All it definitively claims is that Tethers were used to buy Bitcoin when the Bitcoin price fell last year.

There's exceedingly strong evidence Tethers are not backed by USD - the Tether website claims "frequent professional audits", but they never completed their first one, were fired by their auditor, and cited a document explicitly stating it was "not intended to be, and should not be, used or relied upon" as proof of their reserves. It's a demonstrably fraudulent claim right there on their home page.

That is not strong evidence that they are not backed by USD. That is strong suspicion.

> Lack of transparency does not necessarily indicate fraud

https://blog.bitmex.com/tether/

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#50

Post by tom_ »

ceejayoz wrote: post #34
dustingetz wrote: post #26

Real central banks share an incentive to inflate asset prices just as much as Crypto exchanges do (altcoin exchanges take profits in crypto and thus are exposed). The parallels to central banking are astounding to me. Except in crypto this happened at internet speed instead of over 50 years. (I am not talking about money printing and interest rates, I'm talking about actual assets in bubbles like houses and stocks an…

Real central banks regularly raise interest rates to prevent over-inflation of asset prices.

Well, they used to...
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