A Disaster in the Making
An 8200% increase in base money supply would be defined as hyperinflation to say the least. That’s how much the circulating supply of USDT has increased in 2017, and many are speculating that this is one of the main drivers behind the rapid price increase in Bitcoin. It has grown from 9,951,689 Tether on Jan. 1 to the present day figure of 815,181,392 Tether. Source: CoinMarketCap
That’s a lot of fuel for BTC growth, no doubt about it. Hyperinflation in money that is created out of thin air will cause that kind of appreciation in limited supply assets, and is very likely one of the main reasons why BTC has risen by more than 1200% in that same time period from $963.66 to its $11,687.40 at the time of writing. Source: CoinMarketCap
When we take into consideration the relative increase of Coinbase users over that same period, the disparity becomes even more shocking: Coinbase users have only a little more than doubled from 5,500,000 to 13,300,000. Source Coinbase Data
To add insult to injury, the huge increases in Tether funny money supply just so happen to always coincide with Bitcoin corrections! What’s even more frightening is that, unlike previous corrections where the creation of USDT plateaued after the correction, this time the folks at Tether have continued to “print” like there’s no tomorrow even after the correction has finished, further powering the latest rally into the $10,000 + zone!
This doesn’t look good at all. What with just adjusting USDT for the anomalous supply expansions seen on those BTC corrections, that is to say backing out those “liquidity injections”, BTC would trade around $3,000.00 [real] USD.
https://bitcoinmagazine.com/articles/bitfinex-critics-prepare-possible-legal-action-after-cryptocurrency-exchange-lawyers/
we are lucky to have smart minds like you in this community-this is right on and I am so happy for the mind opener-thanks a million for posting this-truly keeps me thinking how i need to translate this into my risk averse appraoch of my wealth portfolio-truly grateful for your warning-mahalo
This Tether thing has gotten me very concerned as well.
What is also surprising is that SBD is trading so high. I've got a theory that this is because people are looking for an alternative stable-coin other than Tether because of these uncertainties and rumors, and this may be the cause of the increased demand causing SBD to be traded for much higher than $1 (oddly enough, for a stable-coin).
I think you've hit the nail on the head with respect to what we're seeing in SBD.
Fun fact.. I was plotting the MACD divergence prior to each crash and get the following:
558
470 (.84) $3,000 --> $1700
1325
1164 (.87) $5000 --> $3000
1992 (.86) $7500 --> $5400
1715
3023
3735 (.80) $ 11800 --> ?????? (Where we are now)
In each preceding crash/pullback we were around .85. We are currently at .80 without a 3 day MACD cross over since the $5400 drop. So I'm thinking this one will be particularly interesting.
If so, then something sinister is coming and those 'in the know' are likely willing to accept paying a high premium if they know it's going to lose them less than keeping it in Tether/BTC/other.
true
Good point. What about Bitshares’ USD pegged assets?
I think you're cool if you're on BitShares. There's no counterparty risk. Everything is 100% backed by its equivalent that goes into a smart contract when the funds come on board. For every bitUSD, there's a real USD in a smart contract. Same thing for everything "Bit" that's traded on BitShares, as I understand it (correct me if I'm wrong; likewise, please confirm it if I'm right).
If there is a blow-up with Tether, unlike the centralized exchanges that could get hit hard, BitShares wouldn't feel a thing. That having been said, all holders of USDT, and related, would get hit. The big difference is that the exchange wouldn't be compromised, again, as I understand things.
Yes that’s how I understand it as well. So given that, why wouldn’t everyone be tethering to bitUSD instead. Is it just not traded on exchanges outside of bitshares?
I haven't looked at them yet
This post got me thinking.. when all these exchanges and market cap sites display a coin’s price in USD, is that price calculated off of Tether?
If that’s true, then one could argue that none of these USD prices are accurate and are subject to some hyperinflationary bubble.
Coinbase is the only exchange I’m aware of that exchanges directly in and out of fiat, and also does not trade any USD Tether.
This is concerning for the whole market. What do you think?
The answer is yes and no. It really depends on who is reporting the price and where they're getting their feed. CoinMarketCap uses an average, I believe. As you can see, there are a lot of different markets, for both USD and USDT. Running through that list you'll find who trades which, and who trades both, that last probably being a fairly reliable "short list" of where funny things are probably going on. 😐
How is tether printing money? Is it through a coin offerings? So many cons out there
It's a centralized cryptocurrency that creates tokens at will.
Here are some good starting points for learning more about Tether:
https://medium.com/@bitfinexed/the-mystery-of-the-bitfinex-tether-bank-and-why-this-is-suspicious-a8a6407a1241
https://cointelegraph.com/news/tether-really-isnt-a-scam-company-promises
https://cointelegraph.com/news/the-strange-story-of-tether-the-digital-money-that-claims-it-isnt-money
https://www.coindesk.com/tether-claims-30-million-stable-token-stolen-attacker/
Thanks. Will give them a read
Here's another interesting wrinkle:
According to this guy on twitter, Bitfinex is being sued for unpaid bills in Italy: https://twitter.com/jnardiello/status/936031581810184193
i agree with your points and this is one of the nice tools to analyze bitcoin as well, thanks for sharing such nice information with us, Stay blessed
Hay its really the price has increase continue. And is,t really right that such huge supply of money in market is not just because if investors .but it's also give platform to terror money to Put into the liquid system .
This post has received a 2.33 % upvote from @boomerang thanks to: @cryptographic
@boomerang distributes 100% of the SBD and up to 80% of the Curation Rewards to STEEM POWER Delegators. If you want to bid for votes or want to delegate SP please read the @boomerang whitepaper.