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On today's show:
Crypto prices dip again because Tether has finally gotten itself into trouble with US regulators and traders got spooked.
Story - Bitcoin Price Pattern 0:42
Charts provided by Coinigy: https://www.coinigy.com/?r=16171fe8
So let’s revisit this descending triangle we’ve been talking about.
The bottom line is that it’s still in play and I can only see room for a maximum of 7 more candles that could possible fit inside the pattern.
So one way or another I’ll have to redraw this within a week.
Now this pullback to 10,000 could have been because of pure technical levels as this consolidation continues, however we know there has been some news that most likely spooked the market, so let’s go onto that.
Story - Tether In Hot Water 1:35
https://coinmarketcap.com/currencies/tether/
The first thing that may have spooked the market is Tether, a cryptocurrency designed to have a stable value.
The purpose of Tether is to allow you to move your wealth into a price stable asset without having to go through the pain and the fees of converting back into fiat currency.
It’s a very attractive offer which is why you see here in red, $3.6b worth of Tether has been traded in the last 24 hours.
That’s a lot when you consider there’s only $2.3b worth of Tether in existence.
This is supposed to work like Casino chips. Not in the sense that you’re supposed to gamble with them, but in the sense that you put your money on deposit and are given chips that can be later redeemed.
https://tether.to/
Tether is actually a company based Hong Kong with offices in the USA.
You transfer say $100 to Tether’s bank account and they issue you with 100 Tether tokens which you can then use to buy cryptocurrencies as if they were real dollars.
People accept Tether in cryptocurrency trades because they know they can surrender the tokens to the Tether company and get US dollars transferred to their bank account.
Tether charge 0.1% fee for transacting too and from a bank account, which is how they make money.
This all sounds great but it relies on Tether having a minimum of 1 US dollar in its bank account for every Tether token in circulation.
Their inability to prove that, has been an ongoing controversy for more than a year.
https://news.bitcoin.com/tether-severs-ties-with-its-auditor-leaving-its-accounts-shrouded-in-mystery/
Then news comes out that Friedman LLP, the accountancy firm that was supposed to be auditing Tether, decides to dissolve it’s working relationship with them, making the publication of any kind of audit even less likely.
Yet over 2b Tether tokens continue to circulate in the crypto economy. Why they haven’t all been redeemed for US dollars by now is beyond me.
https://www.bloomberg.com/news/articles/2018-01-30/crypto-exchange-bitfinex-tether-said-to-get-subpoenaed-by-cftc
What likely really spooked the markets is when Bloomberg published a story late yesterday about US regulators sending subpoenas to Tether in an attempt to forcibly verify that they are solvent.
While these subpoenas were issued on the 6th of December this is only making the headlines now.
While none of this alters the fundamentals of the cryptocurrency markets, the amateaur investors is easily spooked by any such news.
And one of the major appeals about cryptocurrency is that it allows anyone to take control of building their own wealth. So there are two sides to every coin.
So bottom line, I’m not doing anything in response to this news.
I don’t use Tether and have never touched it.
https://makerdao.com/
What I am in the process of doing is arranging an interview with
Rune Christensen, the creator of MakerDAO which has this price stable cryptocurrency called ‘Dai’ D.A.I. which maintains its value by being backed by Ether, rather than currency deposits at a centralised company.
Don’t ask me how it works, that’s why I’m having Rune on the show because this could offer the same benefits of Tether but in a decentralised way.
If you are looking forward to hearing Rune talk to us about the Dai then hit the like button and let me know.
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Thanks for the value add Chris. Just wanted to say great work and keep up the podcasts mate. I listen to you on the way to work and your insight is fantastic. I will keep an eye out for Tether and its implications.
This makerDAO sounds interesting. I'm so going to look into this.
I think this tether is just drama in the crypto world. Just another day on the crypto. Let's just face it volatility makes money. More volatile, more money
Awesome summary, thanks! Every week some kind of FUD, quick dip and bounce. But if they aren't solvent, why don't the apply for some QE money from the FED like all other financial entities ???? (-;
Lol!
Apply for QE money!!
Why? Maybe they arent in the inner circle jerk. You gotta p(l)ay the game to win in that arena!
'zactly ! (-:
I am guessing that your question for DAI is:
"If the whole crypto market corrects or takes a dive, how will holding Ether store my pre-correction value? How is it different than just holding Ethereum?"
Soulds like a card trick to me. And that seems riskier than Tether.
Exactly my question. Will be interested to see their response.
I think that the market is going down not only because of Tether...most of the people is waiting for regulations to come...and see how hard are there...
Agree. I was surprised to hear that there are some regulations. It is hard to keep up with this. I would be curious, as an aside to this topic, on what regulations are available or soon to be available. Surely the exchanges and coin teams are tracking this, I hope. I do know that Germany has "put out there" that there needs to be International Cryptocurrency Regulations, which I can truly understand since in the US, individual states (like Texas) are creating regulations that pertain only to their state. Plus SEC gives too many opinions without making actual regulations, thus scaring everyone in the crypto market, waiting for what will really be the regulations (like waiting for the shoe to drop).
My thought is that it is good that a regulator intervene as they have not been transparent enough with the concept of tether. Tether is not a bad concept if done responsibly and transparently; it is very similar to money market funds which serve as short term investments for investors "parking" cash in the short term. If something is not being done right with investor money, then it should come to light so that investors can make informed decisions with their money. I personally avoid USDT and rather have the money in fiat or one of the bigger cryptos like BTC, BCH, LTC or ETH. I also have these positions in hardware wallets to protect me from the exchanges.
So you are HODL or you are day/week trading. Tether is only helpful to traders/ active investors. If you are long term HODL, then this doesnt apply to you.
Well if Tether get's shut down, it will crash the price of the largest Bitcoin exchange (Bitfinex). That's why people are selling their Bitcoin, to prevent from possible future losses.
this is just what we dont want in the crypto space, bad news that drives the coins down, lets hope tether USD does not go the bitconnect way
I never even heard of "tether". It seems that every other day this month there was some bad news that knocked the market down. I can't wait till January ends!
Bitcoin has broken various key resistance levels so might even drop to $6000. With all the news coming out from South Korea, China, Tether/Bitfinex and loads more FUD it is likely it may drop.
I am a big believer in BLOCKCHAIN so confident it will go up but not sure about short term price. This video helped me make up my mind but still not sure? Please advise guys as I might sell now and look to buy back at a cheaper price. OR JUST HODL
Sorry if my question is stupid, is Tether not on a blockchain that anyone can verify? I guess I am asking how they were able to cheat if that makes sense.
This is a common misconception of block chains. Although once the information is written on the blockchain it is unchangeable and it is verifiable, the information or data input must have been correct and factual. Tether is not set up in a way where there is a system that recordes the inputs and outputs of US dollars in such a way that is recording it each time onto the blockchain. The usdt token is blockchain, but their bank accounts are not, and therefore they are not verifiable outside of an audit.
Awesome summary, thanks
I feel that this is not the main reason, and the attitude of various governments is also important.
informative post... great..
good
.
I think this was the perfect time for this mess to come out. We are already in a bear market. Lets weed out all the horrible news and scam artists we can. So the next bull run is unhindered. This mess in the long run is good for Crypto.
Thanks for your thought, but as Dad below said. Everday day a different FUD. Where will it all end, as Henry would say?
BTW i'm glad that crypto will at least be wiped off projects like that (bitconnect, tether, ect.)
Tether a shite coin and now being investigated by the USA authorities good luck finding the crooks.
Reddit and Twitter full of bad accusations about Tether.
It is always good to hear your calm composure when the rest of the market is in a panic.
Very interested in hearing from Rune Christensen if you can get him on.
Dai Stablecoin seems like the lovechild of ETHLend & Tether! haha
Thanks for sharing Very nice ideas
If Terher goes down, will Bitfinex follow suit? This worries me since I use Bitfinex for my trading along with a couple of other exchanges.
Sorry, but this was the first time I disagree with you.
I feel as you're assuming people are aware that a tether debacle is happening. It's been talked about for a while now. However correlation is not the same as causation.
On another note, I like your Bitcoin chart. My chart is quite similar.
With the IRS no longer allowing like-kind exchanges tether doesn't have much of a reason anymore. The subpoena was just another nail in a nearly complete coffin.
honestly what is the point of tether??? When you HAVE DOGEEEEE
Nice, Great Post @marketingmonk
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Jai Shree Ram
Of your spamming other people’s post with your post that earned you a whole 2 cents? Oh absolutely. Totally jealous.
I don't think it's fair to say 'I came out of nowhere'. If you look at my Steem account you'll see I joined May 2016 and have posted almost every day since then totaling 1226 posts.
If you look at the 'about' tab on my YouTube channel, you'll also see I've been doing this daily since May 2016 https://www.youtube.com/channel/UCLnQ34ZBSjy2JQjeRudFEDw/about