Tether FUD returns and Bitfinex exchange may be the next to fall
The return of the Tether FUD to the cryptocurrency market has caused a decided stir and looks to be another Mt Gox - the collapsed exchange of 2014. Back then the Mt Gox exchange was irreparably compromised and a lot of funds were stolen. This sent the bitcoin price down somewhat amid the concern and controversy. The Tether and Bitfinex exchange debacle happening now could do the same to the market today.
With bitcoin at the bottom of a bear market now, and trying to make its first bullish steps back up in price, this could be another kick back down temporarily. The pattern set by bitcoin the last time it was in this situation, after the bear market of 2014/5, indicates that we are seeing the low points now and might be due for one more retrace back down to the lows of $3-4000 for just one last opportunity to buy in near the bottom of this bear market. Then bitcoin price will climb back up in the official bull run of 2019/20.
The Bitfinex exchange seems to have met its nemesis. It was the same company that controls and prints the stable coin USDTether, which has had a dubious reputation for years now, coming under the spotlight every year for controversial practices. Last year it was the refusal to submit to an audit to prove that it has all the fiat to back the Tether, as promised. Such auditing was never forthcoming. Besides that Tether and (by implication its sister company run by the same owners) Bitfinex look like they may have had good intentions over the past few years of operation but may have run up against the bear market, or hard times, or shady big time investors, or they may have simply been engaged in hubris with all the bloated tether volumes. Or perhaps they were knowingly shady from the start.
Some traders and experts in crypto have been calling out Tether for years. And now that the New York Attorney General is officially investigating both Bitfinex and Tether, it appears as if they have met their match and won’t escape this time. The eye of the law is upon them and the scrutiny may be more than they can handle. Already $850 million of their fiat has been confiscated. If I had money on that exchange I would remove it as soon as possible. I have already sold any Tether I had a while ago, when some earlier Tether FUD emerged in previous months. This is merely the final confirmation that Tether is suspect.
Curiously Tether still has the vast majority of the trading volume on Binance, more than all the other stable coins combined, like USDS USDC Paxos, TUSD. Somehow the majority of traders are still quite happy to be using Tether, if volumes are to be believed, even though prices have diverged. The other stable coins are trading on par to each other but Tether is down by around 2% compared to the rest. Still it trades on par with the USD. It makes gauging the bitcoin price quite tricky at the moment since there are so many varying prices depending on not only which exchange you check but now also which stable coin you use. The difference could be as much as $200 from one place to the next currently.
And bitcoin hardly registered much of a price reaction to the news of the Tether controversy. There was a dip initially a few days ago but price is continuing along its sideways trajectory as always. We are still above $5000 and that says it all. After an epic bull run this past four months since the beginning of the year, bitcoin is due for a significant retrace back to the $4000 level and this Tether FUD could be just the catalyst. I would recommend having some fiat ready for the potential drop back to retest the lows of earlier this year.
This may be the last chance coming up in May now, to buy in for the next bull run, so grab the moment before it passes you by. And forget about Tether in the future. I have certainly let it go, no longer tethered to it in any way. I can trade just as happily in the alternative stable coins available. And Bitfinex is also a thing of the past now. In fact any exchange that only uses Tether should be avoided. Just because this is crypto – an idealistic and egalitarian alternative to the mainstream centralized banking sector – doesn’t mean that there won’t also be some opportunists or shady fraudsters in the digital currency industry. Wherever there is money to be made you will find criminals and Mafia keen to make a quick buck. Crypto is no different.
It’s still the Wild West here with hardly any regulation in the cryptosphere. You are your own broker, banker and safety net. It’s empowering but also highly risky to be involved in cryptocurrency. So many scammers are looking to cheat you and so much can go wrong, from hacking to lost passwords, so be careful out there and trust no one, not even the exchanges or any “expert” in the industry. Do your own research and stay informed. With some simple safety mechanisms in place this could be the year in which your real fortune begins so grab the opportunity. This may be the best time of all.