Wall Observer BTC/USD - Bitcoin price movement tracking & discussion

[Ludwig Von]

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1) Tether is not only used by Bitfinex but spread through multiple exchanges. You you would have to count every cold storage (or see how much Tether is at Bitfinex vs. BTC at Bitfinex)
...

Possible. However, I think this is the wrong approach. Let´s say Tether is exposed as a fraudulent enterprise and
the price drops of USDT drops to nearly zero. People currently have more than 300M $ of USDT on Poloniex according
to the Tether rich list. Why would the Poloniex cold wallets matter in this situation? They are under no obligation to
redeem the 300M $ of USDT for anything. The same applies to Bittrex, Binance, Huobi and so on in my opinion.

Let me illustrate my point using a further example.
1. We are in the November of 2017 and Bob decides to sell 10 BTC for 100k $ on his favorite exchange, Bitfinex.
2. Bob decides that altcoins are the future (poor Bob   ) and wants to withdraw his 100k $ to his favorite
altcoin exchange, Poloniex.
3. Bitfinex has no working fiat withdrawals at this point in time and Poloniex has no fiat banking relationships either.
4. Luckily there is this internet money called Tether.
5. Bob has read on the Tether website that he can "Get the joint benefits of open blockchain technology and traditional currency".
6. Bob is fascinated by this technology and he withdraws 100k of USDT from Bitfinex to Poloniex.
7. Bob dabbles in altcoins and after losing nearly all of his investment he just wishes that he could
turn back time to just keep his Bitcoin on a hardware wallet and never send them to a sketchy exchange.
8. After reading a post by realr0ach he rails against his fate even more, because even buying physical silver
would have been a better choice than dabbling in altcoins  (#in Physical Silver we Trust).

Ok, I admit that I got a little carried away here  

But the gist is that the cold storages of all the altcoin exchanges are not relevant for the
backing of outstanding Tethers, because they are under no obligation to give their users anything
for their USDT if the price of USDT decreases enormously.

Of course ideally even the Bitfinex cold wallet would be irrelevant for the backing of Tethers,
because the outstanding USDT should be backed by actual fiat money in real bank accounts.

It does not need to go off with a big bang of course. Probably more and more users are smelling the danger and will effectively change their Tethers for other coins. This way in the end it is the exchanges that will knock on theter 's door... .

[Samarkand]

...
It does not need to go off with a big bang of course. Probably more and more users are smelling the danger and will effectively change their Tethers for other coins. This way in the end it is the exchanges that will knock on theter 's door... .

Various outcomes are possible. It is even possible that Tether is completely legit and will continue
to thrive for a lot of years.

Personally, I think it is more likely that authorities of some state will put an end to this business.

There are enough precedents.

E.g. take a look at the history of E-Gold:
https://en.wikipedia.org/wiki/E-gold

Especially this quote:

However, in its actions from 2006-2008, the U.S. Treasury Department in conjunction with the
United States Department of Justice stretched the definition of money transmitter in the USA Patriot Act
to include any system that allows transfer of any kind of value from one person to another, not merely national
currency or cash. Using this new interpretation they then proceeded to prosecute the USA-based gold systems,
e-gold (and later e-Bullion) under the USA Patriot Act for not having money transmitter licenses,
even though these companies had previously been cooperating with regulatory authorities and told
they did not fall under the definition of money transmitter.

The bold part from the quote could also be applied to Tether.
Additionally, it is noteworthy that these companies had previously cooperated successfully
with regulatory authorities and even that couldn´t save them in the end. Tether
has not really cooperated with any regulatory authorities as far as I know.

I could be wrong on all of this, but in my opinion Tether will eventually
end up as a successor to E-Gold and LibertyReserve.

[Dabs]

The G20 then labels whoever they want "terrorists" and instructs the centralized pools to not process any transactions for them so your money is essentially deleted and you no longer exist ...

Except they aren't doing that, and can't do that, and can't enforce that. Not to mention the decentralized pools.

Then a single transaction goes through, and it jumps 20 hops ... enters zcash or monero or some exchange / dice site ... good luck with that.

[AlexGR]

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Same for those selling at 3000, 4000, 5000, 7000, 9000, etc - always giving bitfinex serious profits, while people were exchanging their btcs for vapor-tokens, and these BTC now can cover multiple times the USDT balance. Right?

If I understand your post correctly, you are making a mistake.

1. Total Tether issuance (USDT on OMNI + USDT on ETH) = ~2.3 billion $
2. Total BTC in Bitfinex cold-wallet = 140,443 BTC = ~1.63 billion $

Even if all these Bitcoin would belong to Bitfinex, which they do not, they would
not be enough to cover all the outstanding Tether at the current Bitcoin price.

Yes because we have excluded normal fiat operations and money held in the bank. It could be another billion and a half or two. It's very unlikely that Bitfinex bank deposits are zero.

[Torque]

I predict that so much of late 2017's run up was by deep pocket institutional investors (and not retail), that we may see a long period of boring market action sideways for 6-8 months. Maybe longer.

Only boring relative to last year's craziness though. I'm thinking 2018 could be very much like 2016, slow and steady. Make no mistake though, institutional investors will continue to accumulate OTC. Someone has to buy all those newly minted coins each day/month.

[RealMachasm]

I predict that so much of late 2017's run up was by deep pocket institutional investors (and not retail), that we may see a long period of boring market action sideways for 6-8 months. Maybe longer.

Only boring relative to last year's craziness though. I'm thinking 2018 could be very much like 2016, slow and steady.

Doesn't seem to tie up with the number of new signups on various exchanges.
If it was just a relative few deep pocketed investors then surely there wouldn't have been such a demand for new registrations?

[Ludwig Von]

I predict that so much of late 2017's run up was by deep pocket institutional investors (and not retail), that we may see a long period of boring market action sideways for 6-8 months. Maybe longer.

Only boring relative to last year's craziness though. I'm thinking 2018 could be very much like 2016, slow and steady. Make no mistake though, institutional investors will continue to accumulate OTC. Someone has to buy all those newly minted coins each day/month.

That is the best new years wish ever... . I hope it will happen like that. (small swings may be welcome on a regular base to help increase our stash a bit).

[Torque]

Doesn't seem to tie up with the number of new signups on various exchanges.
If it was just a relative few deep pocketed investors then surely there wouldn't have been such a demand for new registrations?

Well if demand was really so high from the retail side, then shouldn't we be seeing the price skyrocket right now? Or at least continue to rise? Hell, 20M+ retail accounts worldwide just trying to buy $50-100 each in this one month would send the price to the moon right now.

But we aren't even seeing that level of buying pressure. That's why I think it mostly came from the institutional side.

I'm sure we'll continue to see 500K - 1M sign ups a month this year, but not sure that will immediately translate to more buying. It really makes me wonder how much bitcoin is being bought by all these new accounts.

[RealMachasm]

Doesn't seem to tie up with the number of new signups on various exchanges.
If it was just a relative few deep pocketed investors then surely there wouldn't have been such a demand for new registrations?

Well if demand was really so high from the retail side, then shouldn't we be seeing the price skyrocket right now? Or at least continue to rise? Hell, 20M+ retail accounts worldwide just trying to buy $50-100 each in this one month would send the price to the moon right now.

But we aren't even seeing that level of buying pressure.

I'm sure we'll continue to see 500K - 1M sign ups a month this year, but not sure that will immediately translate to more buying. It really makes me wonder how much bitcoin is being bought by all these new accounts.

True. It does seem very odd doesn't it?
Are people just signing up but not buying?
I guess it can take a while to get the wheels in motion from beginning to sign up, through verification to eventually sending funds to exchanges.
During that time if the price started tanking it might well have put alot of people off buying at all.
Maybe if we see a sustained increase and less FUD then these new users may just start buying up?
This is all completely hypothetical of course.
In the meantime I am still Hodling. :-)

[FractalUniverse]

Yes, that's the hilarious part.  The last time there was a Bitfinex scare and everyone KNEW they were a fraud, Bitfinex DOUBLED DOWN on fraud.  They knew everyone would convert everything to BTC to try and withdraw, so what do they do?  They pumped BTC on their own exchange right beforehand to make sure everyone is forced to buy the bitcoins at TOP DOLLAR HAHA.  That's how big of crooks everyone affiliated with that exchange is.

by this logic, they would have to significantly pump every coin on their exchange now. Thats not easy when most of these coins are traded on other large exchanges too.,

Personally I don't see much of a difference between tethers and "real" dollars displayed on an exchange after you sell btc or a shitcoin. I mean they are both virtual until you get the money on your hand. Many insolvent exchanges showed dollar balances that weren't reflecting the reality of the USD holdings of the exchange, whether it was MtGox or more recent ones.

So no matter if it says "USD balance" / "EUR balance" / "CNY balance", "USDT balance" or even "BTC balance", it always has a risk when you are dealing with an exchange.

Good point. Actually its the same with whole real world banking industry. When we log in to our internet banking apps, all we can see is just a number. But can we all withdraw or spend that today? No. Not a chance if too many people do it at the same time.

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

[Torque]

People also have to remember that with Mt. Gox, near the end they weren't selling Bitcoin anymore. They were selling fake Goxcoins, and they blocked withdrawals.

At least with Bitfinex, we are assured that they're Bitcoin is the real thing and can be transferred out. Now whether or not they are wholly solvent, that's another story. They're probably running fractional reserve coinage like many of the other exchanges.

[Samarkand]

...

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be
dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone
else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

I was completely agreeing with you until your last sentence. Why do you think that they can´t control it?
They can easily shut down Tether using the same tactic that the US authorities used against
E-Gold (of course the central banks won´t do it themselves, they will let the usual authorities do their
bidding).

Take a look at my earlier post where I described how the Department of Justice and the
Treasury Department simply changed their definition of a money transmitter to a vague definition
that fits literally every business that is somehow related to money transfers.

However, in its actions from 2006-2008, the U.S. Treasury Department in conjunction with the
United States Department of Justice stretched the definition of money transmitter in the USA Patriot Act
to include any system that allows transfer of any kind of value from one person to another, not merely national
currency or cash

[d_eddie]

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

That's why I've been wishing the audit to produce an "all clean" report.

If there's no fractional reserve going on, and tether is really backed up 1:1 by real USD, this means no actual printing privilege has been taken away from the central banks. In turn, this should imply the central banks can't take legitimate action against tether creation and, more importantly, have no need or little motivation to do so.

However, my whole point is moot. Apparently, the audit's been canned and it's likely there is overprinting (fractional reserve) going on, so the games are still quite open.

[Torque]

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

My conspiracy tinfoil hat tells me that Tether was sort of endorsed by the CB establishment. They need Bitcoin and the whole crypto market to have a weakness, an Achilles heel, when the next financial crisis comes. Otherwise they know that Bitcoin will go to the moon and they won't have a way to crash and short it.

Tether could be like their Trojan Horse. 

[d_eddie]

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

My conspiracy tinfoil hat tells me that Tether was sort of endorsed by the CB establishment. They need Bitcoin and the whole crypto market to have a weakness, an Achilles heel, when the next financial crisis comes. Otherwise they know that Bitcoin will go to the moon and they won't have a way to crash and short it.

Tether could be like their Trojan Horse. 

Double and triple crosses. You're just way above in Higher Conspiracy Studies, man.

[OWZ1337]

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

My conspiracy tinfoil hat tells me that Tether was sort of endorsed by the CB establishment. They need Bitcoin and the whole crypto market to have a weakness, an Achilles heel, when the next financial crisis comes. Otherwise they know that Bitcoin will go to the moon and they won't have a way to crash and short it.

Tether could be like their Trojan Horse. 

when Tether dies bitcoin will skyrocket because then the real market makers will fill the void? hmmm

[HI-TEC99]

Doesn't seem to tie up with the number of new signups on various exchanges.
If it was just a relative few deep pocketed investors then surely there wouldn't have been such a demand for new registrations?

Well if demand was really so high from the retail side, then shouldn't we be seeing the price skyrocket right now? Or at least continue to rise? Hell, 20M+ retail accounts worldwide just trying to buy $50-100 each in this one month would send the price to the moon right now.

But we aren't even seeing that level of buying pressure. That's why I think it mostly came from the institutional side.

I'm sure we'll continue to see 500K - 1M sign ups a month this year, but not sure that will immediately translate to more buying. It really makes me wonder how much bitcoin is being bought by all these new accounts.

Most exchanges still have a giant backlog of newly registered users waiting to get verified. Some of them had to upgrade their servers to handle the numbers of users that were already verified, but they still haven't dealt with the unverified backlog. There are still people who have been waiting for months for verification.

After they all get verified the price might skyrocket again.

[HairyMaclairy]

The difference between Mt.Gox and Bitfinex is that, at that time, bitcoin had few use cases, and few exchanges, whereas now, is much more widespread, with lots of use cases and exchanges (there are even people using it to buy cars and houses).

So a Bitfinex scandal would not affect the price as much as Mt.Gox did.

Furthermore, a 500 million theft from a Japanese exchange last week curiously isn't even a talking point now. Are we just being ethno- and bitcoincentric or is this kind of shit just not so important anymore because of the larger ecosystem?

A hack of an exchange holding NEM has no real impact.  It’s like a bunch of Ripple was stolen.

[FractalUniverse]

...

What worries me about tether the most is not that it may not be fully covered by real dollars, but that it might be
dangerously close to what central banks are doing. ANd we all know, that banks are not too happy when someone
else is taking their money printing/fractional reserve monopoly away from them. Especially when they cannot control it.

I was completely agreeing with you until your last sentence. Why do you think that they can´t control it?
They can easily shut down Tether using the same tactic that the US authorities used against
E-Gold (of course the central banks won´t do it themselves, they will let the usual authorities do their
bidding).

Take a look at my earlier post where I described how the Department of Justice and the
Treasury Department simply changed their definition of a money transmitter to a vague definition
that fits literally every business that is somehow related to money transfers.

However, in its actions from 2006-2008, the U.S. Treasury Department in conjunction with the
United States Department of Justice stretched the definition of money transmitter in the USA Patriot Act
to include any system that allows transfer of any kind of value from one person to another, not merely national
currency or cash

I meant they cannot control issuance of tether by themselves, and yeah thats why they will likely push for crackdown.
i dont remember e-gold much, but i know about how they took down liberty reserve. Suddenly "domain seized" landing website appeared and it was gone. People were able to file claims for their money though.

[york780]

They are watching. They are always watching. I see you.