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Worries Grow That the Price of Bitcoin Is Being Propped Up

nytimes.com

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Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#51

Post by tomtimtall »

misja111 wrote: post #43

"Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down." Doesn't this simply mean that when people were selling their virtual currencies, they chose to stall their money in Tether?

If you buy 100 tether for 100$ and I “sell my bitcoin for tether” by trading to you, then no new tether is created. Tether should only be issued when people buy them using new $. Their claim currently is that they have $2bil in an account backing the tether. Yet they can’t get a bank collaboration and can’t manage to get an audit. It smells fishy.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#52

Post by ebbv »

misja111 wrote: post #43

"Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down." Doesn't this simply mean that when people were selling their virtual currencies, they chose to stall their money in Tether?

No because that would involve people buying Tether. Not Tether being printed.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#53

Post by lawlessone »

JohnJamesRambo wrote: post #5

If you haven't already, I recommend getting out of Bitcoin and into Ethereum immediately. There is a transfer of dominance rapidly happening. Market Cap Bitcoin $158,149,902,894 Ethereum $106,632,442,880

Market cap is a terrible measure. If i make a my on crypto coin mine 100 of them and convince one person to buy one for 1000 euro, my coins market cap is suddenly 100,000 euros.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#55

Post by lloyd-christmas »

fancyfacebook wrote: post #3
superkuh wrote: post #2

First they ignore you, then they laugh at you, then they fight you, then you win.

What a meaningless platitude, I'm sure it's the sort of thing was repeated in the 1930s a lot. This is the reason organizations exist to regulate things around trade, otherwise you can get shady exchanges quoting bogus prices with zero accountability. Lots of people are going to get scammed before this gets better.

> This is the reason organizations exist to regulate things around trade

It's worth noting that every industry suffers from fraud. In the insurance industry, it's estimated that 10% of expenditure is fraud-related. 5% of americans were victims of identity theft last year. Loads of people/businesses have been and will be scammed in well regulated industries, while having no indication that it will ever decrease. I don't really know enough about bitcoin to comment on how prevalent it is (I sincerely doubt most people do), but I do know it isn't special in that regard.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#56

Post by mahemm »

paulgb wrote: post #34

I find it weird that people assume this is intentional market manipulation. If they are in fact fraudulent (I think they are), being able to print money is a business model in itself; you don't need to intentionally manipulate the market (but could end up doing so accidentally)

Not true. In order to make sure there isn't a run on their fake currency, they need to ensure that the balance tips towards buying bitcoin rather than cashing out holdings. If the price goes too low, people will start trying to convert tethers to real money, triggering a crash.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#57

Post by paulgb »

notahacker wrote: post #45
paulgb wrote: post #34

I find it weird that people assume this is intentional market manipulation. If they are in fact fraudulent (I think they are), being able to print money is a business model in itself; you don't need to intentionally manipulate the market (but could end up doing so accidentally)

Easier to pump existing BTC holdings with $2bn of imaginary-dollar backed tokens than exchange $2bn in imaginary-dollar backed tokens directly for dollars and find a bank that'll let you cash them out... And if your plan is to ultimately do the latter, you're going to have to cash out slowly and indirectly anyway, in which case why not pump the price of other assets you stand to benefit from in the mean time.

Why pump assets if you can't cash them out?

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#58

Post by mertd »

inputcoffee wrote: post #14
1123581321 wrote: post #6

What’s the difference between legitimate technical trading and propping up a market? Is it just volume?

My understanding from the article is that the problem isn't that the price was propped but that they created fake tether to do so. By fake, I don't mean the tether wasn't real, but that it was not tied to dollars. So they claimed tether was tied to dollars but they produced a lot of it to buy up Bitcoin and the fear is that they didn't wait for dollars to come in but just made the tether out of... well, ether ... and…

That's the allegation, or people legitimately bought tether. It's not clear which is true. Hence the investigation.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#59

Post by inputcoffee »

paganel wrote: post #50

> In recent months, however, many investors have been raising alarm bells about Tether. Hundreds of millions of dollars worth of new Tether were created; almost always when the prices of other virtual currencies were heading down. The Tether were used on the Bitfinex exchange to make big purchases of Bitcoin and other tokens, helping push their prices back up, according to multiple analyses of data from Bitfinex. Sur…

That is an interesting question.

Digital "currency" is unregulated so the question is which law is violated.

If, in purchasing a tether, there is some underlying contract that says the tether is backed by a dollar, then you might claim a violation of the contract. You may have to look at the fine print. Who was the counter party? What were the terms? Who is on the hook for it? Is it an entity that is outside the US?

However, if there isn't such a contract and someone makes the claim, you might claim there was an implied contract. This is harder. Not being a lawyer, I won't even venture to guess how this would play out.

In the absence of those two, I don't know if you can claim there was a violation of the law.

Edit: There is one more law you can violate, and this is the obvious one: Fraud!

In the US it is fraud if:

- somebody misrepresents a material fact in order to obtain action or forbearance by another person,

- the other person relies upon the misrepresentation, and

- the other person suffers injury as a result of the act or forbearance taken in reliance upon the misrepresentation.

So now the question is where is the injury? Especially if they are able to sell of Bitcoin and actually back up the Tether?

Now it might be a question of: the buyer took a risk they had not intended on taking.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#60

Post by throwaway30yo »

Could be the best buying opportunity of the year.

As someone involved in bitcoin since 2012, these cycles are pretty standard. It went from $1000 to around $250 iirc at one point and recovered. No reason it cant go from $20000 to $5000 and recover. It may take many years, but its not as if all crypto will die overnight.

I see crypto being big in the more distant future, 15-20 years away when many of the problems are sorted out. Everyone is focused on the extreme short term.

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