I think the Bitfinex / Tether situation will have much more of an impact than shaking people's confidence. People compare Tether's market cap to the total market cap of cryptocurrencies, but what they should be looking at is its trading volumes vs. that of the rest of the cryptocurrency market. It's closer to 5% in this regard if we discount the Japanese exchanges. Also, while Bitfinex doesn't have large a market share as Mt. Gox did, I still think that in the event they are committing fraud, the ramifications will be much worse on the whole industry from a regulatory perspective.

I agree the Western world is the least likely to close exchanges. Japan too. Only real threat I feel to this right now is China.

Hello everyone,

I wrote a fairly in-depth article (https://medium.com/@Truth_Investor/bitcoin-three-ways-the-bubble-will-pop-40678ce11698) on Medium & Seeking Alpha discussing possible catalysts that could leave to a crash. I would love to hear thoughts & discuss. Here's an excerpt of the conclusion, which brings together the most important parts of the article:

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Bitcoin is a strong long-term investment for anyone who understands what it offers and its perception by the greater markets currently. There are many institutional investors waiting on the sidelines for moments like this to pick it up cheaply. That dry powder will start getting deployed in bulk at around $2,700 if Bitcoin goes that low.

However, it is always crucial to be mindful of the risks associated with any investment. In this article, we covered the three that I perceive to be the greatest threat to Bitcoin’s long-term future. These three catalysts are:

• The collapse of Bitfinex and Tether as a result of fraud.
• Capital inflows drying up for ICOs as funding channels become constricted through regulations, leading to a significant market decline led by Ethereum.
• Blocking of fiat gateways that enable cryptocurrency exchanges to operate, effectively cutting crypto off from the real world.

I can’t provide much counterargument to the first catalyst. Even though it’s more akin to a conspiracy theory than anything else, I don’t see strong evidence to the contrary. As such, I am monitoring the Bitfinex & Tether situation closely. However, the other two catalysts have some strong counterarguments that we briefly discussed and which I will likely go into more detail on in the future:

• Increased regulations could lead to a boom in ICO funding as it adds legitimacy and attracts wealthier investors who provide the bulk of funding anyway, as evidenced by Filecoin’s ICO raising record breaking levels of capital.
• While China is the obvious headline here, Japan is still pro-cryptocurrency and has the highest volumes in the world. The US has added legitimacy to its exchanges through its association with the Winklevoss brothers, FDIC insurance, and sizable seed funding rounds by venture capitalists.

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Which side do you favor? I could see it going either way with ICOs. Depends how far we go with treating them as securities and if SAFT will work.

Agree with everyone above. If you think that it is relevant that it is worth less than one cent rather than its market cap, you shouldn't be investing at all.

If price action goes below $2000, then you can be worried. Until then, we're doing fine.

Plenty of others. If you live in the US, Gemini is a great alternative to GDAX.