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

[Ludwig Von]

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.

Its not about bitfinex, its about tether. Count the number of exchanges with real! USD support - Coinbase, Bitstamp, Gemini and Kraken - thats it.
Now imagine "the market" realizes that there are 2.2Billion worthless "USD" in the system, which where used to pump up the price from 1k$ to 20k$.
Somebody will be the bagholder for those 2.2Billion.

Isn 't the majority of Tethers not sitting on Finex? On Kraken, there is very little volume with it.

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[Ludwig Von]

Its not about bitfinex, its about tether. Count the number of exchanges with real! USD support - Coinbase, Bitstamp, Gemini and Kraken - thats it.
Now imagine "the market" realizes that there are 2.2Billion worthless "USD" in the system, which where used to pump up the price from 1k$ to 20k$.
Somebody will be the bagholder for those 2.2Billion.

The bagholders would be the ones holding tether, not bitcoin.

In relation to bitcoin, this looks like a orchestrated FUD. It already happened before, when price was starting to rise.

We should not mistake between smoke from the BBQ and smoke from a starting fire... .

[Samarkand]

...
Isn 't the majority of Tethers not sitting on Finex? On Kraken, there is very little volume with it.

You can verify where most Tethers are located using the Tether rich list:
https://wallet.tether.to/richlist

Usually, the USDT/USD trading pair on Kraken roughly had a trading volume
of 1M $ per day. Today the trading volume has already crossed 4.5 M $.

[d_eddie]

Having said that, I think one of the best applications of lightning-type channels would be the ability to instantly remove funds which aren't actively traded,

This could be an effective motive for the exchanges not to adopt LN.

edit for something irrelevant: I did a <20sat/byte tx earlier in the day to consolidate some funds, it cleared within a couple of hours... don't even remember when I went *that* low...

Yet a number of exchanges or other online accounts still have a default fee of 0.0008 BTC for a standard 1in+2out tx, and users are not allowed to set it to a different value  

I think the two points made by AlexGR show how we'll really have to lobby the exchanges into servicing user needs. Much more competition is what we need.

[AlexGR]

Its not about bitfinex, its about tether. Count the number of exchanges with real! USD support - Coinbase, Bitstamp, Gemini and Kraken - thats it.
Now imagine "the market" realizes that there are 2.2Billion worthless "USD" in the system, which where used to pump up the price from 1k$ to 20k$.
Somebody will be the bagholder for those 2.2Billion.

Even in the worst case scenario, where bitfinex was printing money out of thin air and giving this vapor tokens to btc sellers, bitfinex still has the btc - which obviously cost more right now.

I mean if you sold btc at 2000$ for 2000 USDT "bitfinex-vapor-tokens", bitfinex still has these btc and it has given them 6x in profits @12k.

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?

[bitebits]

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.

Having said that, I think one of the best applications of lightning-type channels would be the ability to instantly remove BTC funds which aren't actively traded, through the use of the channel. Since exchanges represent a big source of on-chain transactions, it would quickly make transactions cheaper, while also reducing the dangers involved with  keeping bitcoins on exchanges. Want to go off for a weekend? Withdraw the money to the channel. Want to trade on Monday? Resend the money back to the exchange - through the channel... do I want to get the btc right now? I just close the channel... etc etc... It should also theoretically reduce the exposure of exchange hot wallets to hackers - which should move less funds in and out, on-chain.

edit for something irrelevant: I did a <20sat/byte tx earlier in the day to consolidate some funds, it cleared within a couple of hours... don't even remember when I went *that* low...

Interesting thoughts, thanks. Two questions though:

- Wouldn't it mean that if every trader has a channel with for example GDAX, GDAX basically needs to keep all those bitcoins in some kind of a hot wallet? This is how I understand Lightning works, to be able to setup a node you need to have access to the private keys.

- According to Andreas in 'Let's Talk Bitcoin! #352', Coinbase would never setup a Lightning node (don't have the timestamp). This because Lightning by default uses Tor, so Coinbase can't track where the transactions they are passing through their node are going to. Andreas thinks Coinbase/banks have the legal obligation to track where the money is going to.

[mike4001]

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.

Its not about bitfinex, its about tether. Count the number of exchanges with real! USD support - Coinbase, Bitstamp, Gemini and Kraken - thats it.
Now imagine "the market" realizes that there are 2.2Billion worthless "USD" in the system, which where used to pump up the price from 1k$ to 20k$.
Somebody will be the bagholder for those 2.2Billion.

Hmm, wouldn't everyone want to sell their Tethers and buy every coin they can with it and pump prices up even more?

[rezurect007]

Its not about bitfinex, its about tether. Count the number of exchanges with real! USD support - Coinbase, Bitstamp, Gemini and Kraken - thats it.
Now imagine "the market" realizes that there are 2.2Billion worthless "USD" in the system, which where used to pump up the price from 1k$ to 20k$.
Somebody will be the bagholder for those 2.2Billion.

Even in the worst case scenario, where bitfinex was printing money out of thin air and giving this vapor tokens to btc sellers, bitfinex still has the btc - which obviously cost more right now.

I mean if you sold btc at 2000$ for 2000 USDT "bitfinex-vapor-tokens", bitfinex still has these btc and it has given them 6x in profits @12k.

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?

Basically an audit would prove the current solvency in the above case, but would also prove the vapour token theory, not very helpful.. loss of trust.
I believe this is the reason the audit hasn't happened.

[Samarkand]

...
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.
You also assume that all these Bitcoin belong to Bitfinex, which is obviously not true, because
these are mainly user funds. If people sold Bitcoin at 3000,5000 and so on the profits
may not have gone to Bitfinex, but to other users of the Bitfinex exchange.

Of course it is possible that I misunderstood your post or that Bitfinex
has substantial cryptocurrency holdings in other currencies than Bitcoin (e.g. big holdings of
ETH or some of the tokens that they list).

Random speculation:
Personally, I suspect that they obviously
acccumulate tokens like RLC or RCN before they list them on their exchange.
It is simply too easy to make money by buying up a random token and then making
profit after you list it on your exchange (https://pbs.twimg.com/media/DUT-ULkWsAA9Pxt.jpg:large).

Bitfinex main income should theoretically be coming from trading fees and not from selling
Bitcoins directly.

...

Hmm, wouldn't everyone want to sell their Tethers and buy every coin they can with it and pump prices up even more?

This is exactly what many people including me predict what will happen in the case of a Tether collapse.
The prices of all cryptocurrencies on these exchanges will go completely parabolic, because of people
that desperately try to exchange their worthless USDT for another cryptocurrency.

[OWZ1337]

...
Isn 't the majority of Tethers not sitting on Finex? On Kraken, there is very little volume with it.

You can verify where most Tethers are located using the Tether rich list:
https://wallet.tether.to/richlist

Usually, the USDT/USD trading pair on Kraken roughly had a trading volume
of 1M $ per day. Today the trading volume has already crossed 4.5 M $.

wow #1 is bittrex scammers!!   #flamingredflag

[julian071]

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?

[mike4001]

...
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 $

I think this assumption is false because

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)
2) You are assuming every Cent of Tether is fraudulent.

[MarquiseMuseum]

...
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.
You also assume that all these Bitcoin belong to Bitfinex, which is obviously not true, because
these are mainly user funds. If people sold Bitcoin at 3000,5000 and so on the profits
may not have gone to Bitfinex, but to other users of the Bitfinex exchange.

Of course it is possible that I misunderstood your post or that Bitfinex
has substantial cryptocurrency holdings in other currencies than Bitcoin (e.g. big holdings of
ETH or some of the tokens that they list).

Random speculation:
Personally, I suspect that they obviously
acccumulate tokens like RLC or RCN before they list them on their exchange.
It is simply too easy to make money by buying up a random token and then making
profit after you list it on your exchange (https://pbs.twimg.com/media/DUT-ULkWsAA9Pxt.jpg:large).

Bitfinex main income should theoretically be coming from trading fees and not from selling
Bitcoins directly.

...

Hmm, wouldn't everyone want to sell their Tethers and buy every coin they can with it and pump prices up even more?

This is exactly what many people including me predict what will happen in the case of a Tether collapse.
The prices of all cryptocurrencies on these exchanges will go completely parabolic, because of people
that desperately try to exchange their worthless USDT for another cryptocurrency.

Interpol asset freeze would prevent this scenario, tether is already under investigation by us law enforcement since a long time. People would not have access to their USDT funds which would be "disabled" on exchanges before the news of fraud became public. Regulators have a strange hold on all major us based exchanges such as bittrex, they snap their fingers and have demands met instantly. Possibly a few tethers here and there would make it intoother exchanges but its negligible sums, wouldn't affect global prices.

[fabiorem]

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?

Was XEM price affected by that hack? It had a pump yesterday.

[Samarkand]

...

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.

[Ludwig Von]

...

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]

...
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.