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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

#61

Post by notahacker »

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 it's newly created Tether, the theory requires them to decide they don't want to hold as much cryptocurrency, then successfully convert large holdings of cryptocurrency to real USD in their own bank account, then wire that USD to Tether's Taiwanese bank account so that they could buy USDT, an asset whose sole virtue is it being slightly easier to buy cryptocurrency with (on exchanges that aren't good at or able to handle dollars).

Which doesn't make sense period, never mind over the timescales discussed.

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

#63

Post by banderman »

dlandis wrote: post #25

I'm curious how big the ramifications for Bitcoin will be if the majority of Tether tokens are proven to be fraudulent and Binfinex collapses (which doesn't seem that unlikely at this point).

It's not just Bitcoin, it's every altcoin listed on that exchange, and the other two big Tether/USD exchanges (Poloniex and Bittrex).

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

#64

Post by meritt »

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?

> Doesn't this simply mean that when people were selling their virtual currencies, they chose to stall their money in Tether?

Correct, and that's precisely how Tether helps prop up the price. There is a limited amount of actual USD floating out there to buy up BTC. People selling BTC in exchange for USD will lower the price. However two current trends can eliminate those sell orders before they impact the price. They are:

* They may be convinced not to sell, that they should hodl (sic) instead. No sell order occurs.

* They may be convinced to accept USDT instead of USD. No USD selling pressure occurs since they are willing to accept an IOU.

So why does Tether keep printing more? It's an easy way to absorb a portion of the selling pressure that wasn't convinced to simply not sell.

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

#65

Post by LargeWu »

inputcoffee wrote: post #59
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?…

If they say Tether is backed 1:1 by USD, and it's not (allegedly by a wide margin), then it's clearly fraud.

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

#66

Post by cagenut »

inputcoffee wrote: post #59
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?…

dead center, first row of their home page:

  Every tether is always backed 1-to-1, by traditional currency held in our reserves. So 1 USD₮ is always equivalent to 1 USD.

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

#67

Post by JustSomeNobody »

Waterluvian wrote: post #15
serg_chernata wrote: post #10

Earlier quoted context omitted.

I agree with your sentiment but come on. It's not like there are instances where GS would say "this seems slightly unethical, but so are we". You're implying they ever admit wrongdoing.

Respectfully, it's a comment in jest not deserving of such logical scrutiny.

Respectfully, HN simply does not do jest very well.

Edit: See what I mean?

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

#68

Post by afjl »

epmaybe wrote: post #30
jandrese wrote: post #7

“It’s a signal to the market of what those who have scrutinized the situation already believe: There is a problem here,” said Jill Carlson, a former trader at Goldman Sachs who now consults with a variety of virtual currency companies. “The dissolution of a relationship between an auditor and a company is very rarely a good sign that the company is behaving in accordance with market best practices.” When you're getti…

I know what you said is in jest, but did you read what you quoted? The individual in question worked at goldman sachs as an analyst/trader for maybe 3 years (AngelList), and hasn't worked there in at least two years.

This is actually very common, especially in "bulge" tier companies. My best friend interned at GS and has accepted a job there; apparently, all newly-hired analyst/traders bust their ass for the first 2 or 3 ish years before getting "hired away" by a better paying, less demanding company (typically in private equity, VC, asset management, etc). Same happens in the accounting industry.

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

#69

Post by foepys »

zerostar07 wrote: post #42

why don't the other exchanges just drop their USDT pairs ?

A lot of exchanges are using Tether to avoid coming in contact with USD. Most, if not all, of them have no banking access, so Tether is the only way they can pretend to trade in USD and still be safe from US banking regulations.

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

#70

Post by adrianN »

throwaway30yo wrote: post #60

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…

Even if you assume that crypto will be successful in 20 years, there is no reason to believe that Bitcoin will still be around.
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