Crypto: Are we seeing real buying or something else?
Bitcoin and the rest of the crypto markets have seen a little boost over the past 2 days.
The question is though, are we seeing real buying due to demand for bitcoin, or something else?
Unfortunately, I believe it is mostly that something else category, though not entirely.
I actually hinted at what might be causing it in my post yesterday.
It can be seen here:
https://steemit.com/tether/@jrcornel/tether-starting-to-lose-its-peg
What is going on?
Likely we are seeing the after affects of tether starting to lose its peg.
Everyone has been calling for this for a long time yet it hadn't really happened yet, until 2 days ago.
Tether plunged as low as $.92 on coinmarketcap (much lower on the Bitfinex exchange) and we saw significant money flowing out of tether for the first time in a long time.
(Source: https://coinmarketcap.com/currencies/tether/)
Sounds like bad news for crypto markets, right?
Wrong.
You see, when someone sells tether, in most cases they must buy bitcoin or ether because those are the two currencies that tether is most often priced in.
Which means, any selling in tether would result in buying in bitcoin or ether.
So, if you get a sell off in tether, you likely get a pop in bitcoin and ether, which also likely helps pull up the rest of the crypto markets as well because most every other coin is priced in either bitcoin or ether.
Unfortunately, much of this money will likely eventually find its way back into another stable coin or fiat since that is where it wanted to be in the first place.
Which means, the pop in prices may be short lived.
However, there is likely some real demand as well.
That being said, there is likely some real demand as well, though likely not nearly to the extent of money just moving out of tether.
There has been some significant news announcements of late.
None of them bigger than this one:
Fidelity announced a custody solution for institutions as well as opened the door to many more investors.
From Fidelity CEO Abigail Johnson:
“Our goal is to make digitally native assets, such as bitcoin, more accessible to investors."
On last check, Fidelity has roughly $7.2 trillion in client assets.
Conclusion:
Much of the recent pop is likely due to money flowing out of tether and into bitcoin and ether.
However, I don't expect this little bounce to be fully reversed as that money eventually makes its way back into other stable coins because...
There has been some great news coming out over the past week, none bigger than Fidelity getting involved in the crypto space.
Stay informed my friends.
Image Source:
https://hacked.com/last-years-crypto-boom-was-fixed-researchers/
Follow me: @jrcornel
I demand a RALLY! 🧐💰🧐
Time to convert your steem into bitcoin?
If bitcoin goes up, I am hopeful it drags steem along with it.
Hopefully prices will increase and that is what everyone expects.
Probablemente es algo más, revisemos https://steemit.com/crypto/@madiba24/bakkt-microsoft-wall-street-down para conocer la jugada de wall Street y Bakkt junto a las tecnologías de Microsoft.
The news fundamentally continues to be positive for bitcoin and cryptocurrencies; it is just the fact of the large increase we had last year is still finding it balance as more types of investors have gotten in with a shorter time frame for their goals. This is likely to continue until a catalyst mive the market either way.
Correct. We are still working off the excesses from the move last year. Once that is worked off, we go up again.
"On last check, Fidelity has roughly $7.2 trillion in client assets."
This is definitely great news for crypto.
Pretty big number huh?
Manipulation.
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Steem Dollar (SBD) would be the better stable coin, because it is transparent, and thus more predictable and honest. It just needs to have a peg also in the upward direction when it is above $1.
How do you peg it to $1 though since it is trading openly on exchanges?
SBD is pegged by using Steem via the Convert to Steem function. If SBD falls below $1, it can be converted as if it was worth $1 to Steem which would bring the price up on exchanges eventually by arbitrage trading. Pegging it in the opposite direction can be achieved by the inverse conversion (Convert to SBD), which has deliberately not been implemented so far. More info in the whitepaper: https://steem.io/SteemWhitePaper.pdf
Once it is trading freely on exchanges it becomes impossible to peg unless the exchanges are helping peg it.
It is possible to peg Steem Dollars to USD without the help of exchanges by arbitrage trading. As soon as the price falls below $1 there is an arbitrage opportunity to buy cheap SBD, convert it to Steem as if it was worth $1 and then sell it. As long as the underlying crypto (Steem) has value and as long as the printing rate of Steem Dollars is limited, this can work pretty well: https://coinmarketcap.com/currencies/steem-dollars/
Unless there is more demand for it on the exchange than there is supply internally to suppress it, which is exactly what happened. If tens of millions of dollars suddenly flow into SBDs on an exchange, there isn't enough supply to suppress that kind of buying pressure to keep prices at a dollar. Which means... anytime a group with a nice stack of cash decides they want to pump SBDs, they can.
Pegged on Steemit but freely exchanged on exchanges is what he's saying. That is how the arbitrage opportunity is artificially made. The intended effect of this non-exchange-based peg would be a lower bound, not a price ceiling.
Correct, and without a ceiling, what is the point?! Also, it's not really even a lower bound, at least not a very firm one. If there is enough selling on exchanges to drive prices down, they will fall too on the internal market. The only saving grace would be to use the convert function in that case to ensure that $1 SBD stays worth $1 USD worth of steem.
I totally agree with you... The peg should put back in but this will not happen because it makes to much money for to many people... this greed on the short term is sad but there is nothing for it. If SBD is not pegged on the up side its a useless coin imo
How could it have been pegged? There simply was too much money coming in and not enough supply to suppress it. Supply and demand determine prices on the open markets, which is why the SBD cannot be pegged if is trading freely on exchanges, unless the pegging system has more cash than could come in on the exchanges, which in this case likely would mean hundreds of millions of dollars.
Right now you are seeing some real selling. People just waiting on the ask hoping to get their money back. Have to weed those peeps out first...
Yep. I would not be surprised if we have not seen the bottom yet, though I am hopeful that we have.
I like the fidelity news. I'm sure we'll get our bull run soon enough
Pretty much how I am feeling as well.