Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say • Hacker News Board

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

#181

Post by craigc » Wed, Jun 13, 2018, 6:08 PM UTC

tomkarlo wrote: post #166

craigc wrote: post #152

Earlier quoted context omitted.

All valid points. I personally am very eager to see what happens to Bitcoin and crypto currencies during the next recession.

It's an interesting question, but rationally it seems like BTC should decline during a market crash / recession. It's arguably a way to store value as other assets decline, but given that it has no yield, the rational thing to do after that decline is over would be to cash in your BTC and use it to purchase those other assets that have declined, such as real estate, bonds or stocks, and now have either attractive yie…

I wrote a bit about my opinion in a reddit thread a while back. It is here if you are interested, but a fair warning it will probably be quite an unpopular opinion with the hacker news crowd:

https://www.reddit.com/r/BitcoinMarkets/comments/7xq7mp/comm...

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

#182

Post by jrkatz » Wed, Jun 13, 2018, 6:09 PM UTC

ericb wrote: post #168

Animats wrote: post #138

Earlier quoted context omitted.

The big generation of Tether occurred around the top, as Bitcoin neared US$20,000. Now it's around $6,000. If that was their strategy, they lost big.

No no, if you can acquire a $6,000 bitcoin for $0 and sell it, your scam has a 100% margin. It is still profitable whenever you can run the scam, at whatever price above $0.

Right, but if they acquire $6000 for 20000 tether (that they paid $0 for), and promise that tether is full redeemable for $20000, they are $14000 short when the tether holder comes knocking.

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

#183

Post by partiallypro » Wed, Jun 13, 2018, 6:09 PM UTC

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…

Washtrades and Bitfinex's tether were no doubt a huge factor. Someone wrote a great article about it back in November-December, but I can't for the life of me remember where/who.

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

#184

Post by fixermark » Wed, Jun 13, 2018, 6:11 PM UTC

... as opposed to all other times, when its value is finding a natural balance and not at all driven by speculation, no sir. ;)

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

#185

Post by existencebox » Wed, Jun 13, 2018, 6:14 PM UTC

partiallypro wrote: post #183

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…

Washtrades and Bitfinex's tether were no doubt a huge factor. Someone wrote a great article about it back in November-December, but I can't for the life of me remember where/who.

Probably "bitfinexed". I think I know the article you're talking about, but could only find another quickly peeking through my history, but perhaps it'll serve as a breadcrumb for you.

https://medium.com/@bitfinexed/meet-picasso-the-painter-on-g...

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

#186

Post by jonknee » Wed, Jun 13, 2018, 6:15 PM UTC

kerng wrote: post #176

So, the Bitcoin price rose because people bought it (via Bitfinex). The price fell when it was sold. I imagine doing a similar study on transactions from Coinbase (which has a big user base and volume) might reveal similar results. Is there evidence that this was orchestrated or was done maliciously by a small group of actors. The headline is written like there is more to it.

You missed the part about the owners of Bitfinex running a pretend currency and bidding up BTC with it. That's why Bitfinex is different than Coinbase. It was like clockwork, you'd see a dip, a huge amount of Tether's would come online and boom huge volume at Bitfinex buying the dip and surging to new heights.

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

#187

Post by 456hdsaq234g » Wed, Jun 13, 2018, 6:18 PM UTC

ufo wrote: post #177

DINKDINK wrote: post #174

Earlier quoted context omitted.

>magical fountain of fake dollars The problem though is that if ether really were a "magical fountain of fake dollars" that would be reflected somewhere in the market price of tethers. Look at the price charts for tether->USD it's pretty nominally 1:1 https://cryptowat.ch/markets/kraken/usdt/usd The most contrarian one could argue is that people who sold bitcoin for fraudulent tethers haven't tried to withdrawal them…

One problem with the market price for tethers is that it is actually very hard to sell them for USD. For example, Bitfinex does not allow USD withdrawals, only Bitcoin withdrawals.

not too hard. kraken and bittrex both do USD/USDT pairs (which, at 1.0 is a good metric of USDT health)

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

#188

Post by trendia » Wed, Jun 13, 2018, 6:24 PM UTC

skybrian wrote: post #113

gowld wrote: post #62

Earlier quoted context omitted.

What's the difference between a real dollar and a fake dollar? All dollars are first-order fake.

What's the difference between a fake promise and a real promise? The government guarantees that dollars are acceptable for paying taxes. For a promise, that's about as real as you're going to get.

This may be true, but the government also has the power to control inflation, which limits the purchasing power of those dollars.

See: Venezuela, Zimbabwe, Germany ~1920

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

#189

Post by DINKDINK » Wed, Jun 13, 2018, 6:24 PM UTC

ufo wrote: post #177

DINKDINK wrote: post #174

Earlier quoted context omitted.

>magical fountain of fake dollars The problem though is that if ether really were a "magical fountain of fake dollars" that would be reflected somewhere in the market price of tethers. Look at the price charts for tether->USD it's pretty nominally 1:1 https://cryptowat.ch/markets/kraken/usdt/usd The most contrarian one could argue is that people who sold bitcoin for fraudulent tethers haven't tried to withdrawal them…

One problem with the market price for tethers is that it is actually very hard to sell them for USD. For example, Bitfinex does not allow USD withdrawals, only Bitcoin withdrawals.

>it is actually very hard to sell [tether] for USD

Kraken offers a USDTUSD pair. How is that hard at all? https://blog.kraken.com/post/206/kraken-announces-support-fo...

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

#190

Post by SwellJoe » Wed, Jun 13, 2018, 6:26 PM UTC

bhouston wrote: post #67

cstejerean wrote: post #55

Earlier quoted context omitted.

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?

My theory is that it was initially not backed fully but after the fact it became backed. A billion or two dollars is not that much money to eventually get, especially if you also hold a lot of valuable BTC as a result of this manipulation. Basically the unbacked tether allowed them to purchase BTC and with the great price increases that become worth way more than the unbacked tether allowing them to leverage that to…

This scheme would likely have fallen apart when they were printing and BTC continued to go down...they were no longer able to keep the price rising, so they likely weren't able to buy more USD than the USDT they printed.

To me, it really looks like Tether was propping up a significant portion of the valuation of BTC for a few months; they were printing enough to buy roughly half of all miner output (and in a market where most coins are in a state of HODL, the miner output and demand for it determines the market price). Probably much of the climb up to 10k was market manipulation by Tether. Yes, lots of dumb money went into the market in response to the climb, but when the printing slowed, the market fell pretty fast.

So, I agree it was ballsy, but I strongly doubt it's fully backed even now. I think when they started printing a hundred million Tethers every few days is when the market began to tip against them, and they were desperately trying to keep the BTC price climbing. They're gonna walk away from this scam multimillionaires, unless they go to jail, but they've never been sitting on 2+ billion USD in cash reserves (I just checked, there are currently 2.5 billion Tethers in circulation). I find that idea literally unbelievable.

Frankly, I'm out of crypto until Tether is, or until there's an audit by a reputable firm which I'd wager will never happen. Somebody's gonna get hosed on the deal, and it's gonna be pretty much everyone involved in crypto who isn't running a massive ponzi scheme, I'd guess. If there's anyone left that meets that description.