Why the Tether FUD doesn't make sense and we are getting manipulated

in #cryptocurrency3 years ago (edited)

The Tether FUD is overblown and doesn't make much sense. The entire basis of the Tether FUD comes from a random anonymous Twitter account, Bitfinexed, that seemed to have a personal vendetta on Bitfinex. They original claimed Bitfinex or some entity on Bitfinex manipulated prices through spoofing. They called the entity "spoofy".

When that didn't catch on too well, Bitfinex pivoted and started focusing on Tether. The account claimed that Bitfinex (which essentially was the same company as Tether) didn't have the reserves to back the Tether they've issued. The Tether strategy worked really well, partly because Tether economics is complicated and partly because the idea of "printing money" has a huge stigma in society, and especially so in the cryptocurrency community.

But I don't believe the Tether FUD makes any sense at all. Here are some things to think about:

  • Of all the places to commit fraud, why would Bitfinex commit fraud ON THE BLOCKCHAIN
  • The only reason we're even talking about this is because Tether is a completely transparent system
  • For Bitfinex to "print money" and do so so openly on the blockchain is just asking for unwanted scrutiny. If they were actually commiting fraud, it'd be incredibly stupid to do so.
  • If Bitfinex wanted to commit fraud, they can simply manipulate their database if they wanted, why go to all the trouble and issue highly visible transactions on the blockchain?
  • Tether is being used and held in several of the largest and top exchanges in the world, including Binance, Bittrex, OKex, Poloniex, and Kraken. Why would all these companies forsake the incredibly profitable business of facilitating crypto trading and participate in a fraud?
  • The amount of Tether issued at a time (usually $100 million) is miniscule compared to daily Bitcoin volume alone. Daily Bitcoin volume is around $5 - 10 billion. $100 million is 1% of $10 billion. That's not going to move the market significantly. The total market cap of Tether is only $3.6 billion, less than daily Bitcoin volume alone.
  • When the market falls, investors seek to hide in Tether, this naturally increases Tether's price. In order to keep Tether's peg to USDT, Bitfinex needs to print Tether to keep up with demand. When prices start rising, people leave Tether. Bitfinex keeps Tether's price stable by being on the other side of the trade and buying Tether.

The market is also being heavily manipulated by the media. Bloomberg released an article claiming that Tether/Bitfinex was subpoenaed "last week". Then after it has induced enough panic, the author makes a correction to the article, changing the subpoena date to EARLY DECEMBER. Why would Bitfinex continue to print Tether open after a subpoena 2 months ago? This is blatant and irresponsible market manipulation and no doubt hurts a lot of people as they panic sell near the bottom. Before edit vs after edit.

Finally, on the topic of Bitfinex not having the reserves to back Tether. I find it very skeptical that one of the largest and most liquid exchanges in the world doesn't have the cryptocurrency and fiat assets to back Tether. Not to mention the risk is spread out over other exchanges, since many large exchanges own and operate Tether markets. If I was a betting man, I wouldn't bet on Bitfinex not having enough assets to cover a mere $3 billion in Tether.

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the market (and us) are being manipulated for sure. Some big organizations, that have deep pockets, do not want the people to take the power back. They want to FUD this space until they can get their centralized models into the mainstream (and profit off the volatility while they play)

Educating the people who are coming into the space is key, we need to change minds from getting rich quick, to enriching our global society by freeing it from control and censorship of the few.

Its a tough, up hill fight, but the more we take action, educate and fight the FUD the better.

Channel your inner Rage Against the Machine!

I disagree. If tether can't keep an accounting firm that's an issue. If they are going to claim 100% backed by US$, then they need a higher level of scrutiny than some crapcoin and they should have a way to prove it. https://steemit.com/tether/@realstep/tether-failure-can-affect-all-cryptos
In any Ponzi scheme, everything is fine until the market drops or people start cashing out. I don't have anything to gain through my tether analysis and just wanted to inform people to be careful and don't assume its the same as US$.
In addition, looking at the latest charts and volume on tether it looks like they tried to pump the price back up to $1 but it fell back down again.

All this market manipulation by the childish behavior of whales drives the cryptocurrencies right into the arms of centralised governments and banks who are screaming for regulation out of pure fear of losing power. But that's just my humble opniion.

Lets say I buy for 1000$ of Bitcoin on Coinbase, send it to Binance (they support tether) , and then I successfully trade it for 1100 USDT.
Where did Tether get cash in this equation? Coinbase has the fiat dollars. Tether almost freezes fiat. with a good trading strategy I can use 1100USDT and buy 0.12 BTC.

If an exchange starts paying out dollars to tether, it beats the entire purpose of using tether. Your using it wrong if you want USD in the end.

I dont believe tether has money because it doesnt make sense. In my country I cant get actual US dollars from tether, so maybe its a regulation issue.

Tether fascinates me, but it feels like a dangerous game.

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