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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

#51

Post by paulpauper »

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…

the second choice would be true if tether were fake. the evidence suggests it's backed by real money

maybe there is a third option:

3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

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

#52

Post by Angostura »

craigc wrote: post #49
ceejayoz wrote: post #42

Earlier quoted context omitted.

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/

Putting it another way, there is no evidence that Tethers are backed by dollars.

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

#53

Post by ceejayoz »

craigc wrote: post #49
ceejayoz wrote: post #42

Earlier quoted context omitted.

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/

> Lack of transparency does not necessarily indicate fraud

Fraudulently claiming "frequent professional audits" that don't exist is good evidence of fraud.

So is having a big link "proof of funds" on the home page that links to https://tether.to/wp-content/uploads/2017/09/Final-Tether-Co... which says "not intended to be, and should not be, used or relied upon by [non-Tether parties]".

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

#54

Post by deltateam »

Nursie wrote: post #43
deltateam wrote: post #36

Earlier quoted context omitted.

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 fulfi…

okay, then for your case only the ELSE IF is important.

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

#55

Post by cstejerean »

paulpauper wrote: post #51
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…

the second choice would be true if tether were fake. the evidence suggests it's backed by real money maybe there is a third option: 3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

Which evidence? Because around December when they were printing about a billion dollars worth of tether there was zero evidence it was backed by anything other than wishful thinking. Maybe that’s changed?

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

#56

Post by craigc »

thisisit wrote: post #46
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 inves…

> I am sure many said something similar about housing prices in 2005.

The difference is that the housing prices were clearly in a bubble and banks were intentionally packaging subprime mortgages that they knew were bad and selling them as a low risk investment. This is much much different than Bitcoin. I would argue that Bitcoin is the only asset class that is not currently in a bubble.

> The article doesn't prove the math is sound

I suppose you are right, but I still think it brings up some good points. The Bitcoin market cap is minuscule compared to any other established market. What gives gold its value? It is not that it is used in jewelry. It is that there is a limited supply of it, it can’t be easily created/counterfeited/reproduced, it is divisible, and it can be used to store and exchange value. Bitcoin has the exact same properties, but is even easier to purchase, store, and exchange. I fully believe that Bitcoin and Gold market caps will reach parity some day. Maybe it will take 10 or 20 years, but I believe it will happen.

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

#57

Post by maxerickson »

paulgb wrote: post #15
ceejayoz wrote: post #11

Earlier quoted context omitted.

> You can just print money, that's the business model. That is not Tether's stated business model. To issue 1 USDT, Tether is supposed to take in 1 USD from someone, and hold it safely in an account. Their stated business model is taking a 10 basis point or $20 fee (whichever one is higher) when someone buys USDT with USD. https://tether.to/fees/ The likely fraudulent business model would be printing USDT that aren't…

> The likely fraudulent business model would be printing USDT that aren't backed by USD, purchasing cryptocurrencies with it, and then pumping up the value of that cryptocurrency to realize gains. If Tether prints, say, $100M USDT, and buys Bitcoin with it, they'll move the market up. But then when they cash out their gains, they'll move the market down. It's still a profitable business model, because they can get ~1…

If you create a $100 million dollar lie and convert it to $5 million real dollars, in the end you have...$5 million real dollars.

So someone could run a pretty big grift without crashing a market.

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

#58

Post by paulpauper »

josu wrote: post #37

I don't know, I followed all the ride very closely, and I don't think that manipulation played that big of a role. Bitcoin was clearly undervalued at the beginning of the year, when its price was around $1,000. Bitcoin needed a protocol update, however, the community couldn't agree on how to proceed, and there was the threat of a contentious fork, where bitcoin would split in 2. In the end, the protocol update was ca…

Bitcoin was clearly undervalued at the beginning of the year, when its price was around $1,000.

how could such a determination be possible?

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

#59

Post by ceejayoz »

tom_ wrote: post #50
ceejayoz wrote: post #34

Earlier quoted context omitted.

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

Well, they used to...

Rates in the US were raised 3x in 2017, and we're reportedly getting the second of 2018 today.

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

#60

Post by lossolo »

paulpauper wrote: post #51
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…

the second choice would be true if tether were fake. the evidence suggests it's backed by real money maybe there is a third option: 3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

Yes, third point is the most likely, a lot of that money was coming from ordinary people. I know people that are not tech savy at all and they invested in bitcoin when it was worth 15k and holding because they don't want to sell now for 2x times less.

One of my mining rigs was bought by farmer, second was bought by guy selling audio hardware etc. The bubble was so strong, everyone wanted to get in either by buying mining rigs (not understanding how minining/difficulty works) or buying crypto.

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