This post is opinion backed with factual evidence. I know it's going to get a bunch of pushback but my intention is to share with you what I've done and why. In the end you have to make your own decisions. I'll provide sources for my reasoning that I encourage you to check out.
I'm 100% out of crypto. Why? On February 23 of this year the NY District Attorney announced a settlement agreement in the state's investigation into the 3rd largest currency by market cap, Tether. Their investigation determined Bitfinex and Tether Deceived Clients and the market by Overstating Reserves,
Hiding Approximately $850 Million in Losses Around the Globe. An agreement with iFinex, Tether, and their related entities required them to cease any further trading activity with New Yorkers, as well as forced the companies to pay $18.5 million in penalties, in addition to requiring a number of steps to increase transparency. I encourage you to go back and look at the chart for Bitcoin and the stock market after this announcement. Both saw significant declines. This was only one state and did not apply to anywhere else. Since then tether has continued being used.
For those of you unfamiliar tether is what it's called a stablecoin. The creators of tether alleged that each coin is backed by a dollar. The New York district attorney investigation found this to be false. Furthermore several academic papers have alleged that tether was the whale that drove the 2017 rise in Bitcoin prices and then caused its eventual collapse. The last claim has some controversy but I encourage you to read the paper I will enclose a link. The first question is not in controversy. the stablecoin tether is not backed by $1 for every unit like they claimed. They now claim that it's backed by a dollar or cash equivalent. As a part of their settlement agreement they are required to provide information as to what exactly these cash equivalents are. They have failed to do so. This caused the moment that I was waiting for as the sign to get out.
There's a growing cry for a larger scale investigation into tether more specifically an audit into their books. I believe the evidence is overwhelming that they are a fraud on a level of Bernie Madoff. They are involved in billions of dollars worth of crypto Trading. If you look back at the charts for what happened when one state declared tether to be a fraud and multiply that by the 49 remaining I think you will see why I'm out of all crypto right now.
One state has already proven that bitfinex and tether are frauds creating coins to cover losses on a massive scale. I was surprised at the time that people just seemingly forgot this and it continued being the standard for stable coins in the industry. In fact if you go to almost any exchange it will quote you the crypto versus USDT. So should an investigation find what the New York district attorney found and take the same action they did in banning it the consequences in the crypto market would be significant. I'm not claiming that tether is going to end cryptocurrency as a concept but I am claiming with evidence that it will cause a significant decline in the price. That one combined with the Chinese crackdown is more than enough reason for me to sit on the sidelines for a bit.
I realize the comments are going to be filled with pro crypto people saying hodl or something and that's fine. I'm not trying to convince you to do anything it doesn't affect me but I am trying to provide you with information you may not have so that you can make a decision for yourself. So examine the information and make your own choice.
Research on the Bitcoin whale
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066
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Bitcoin’s Price Was Artificially Inflated, Fueling Skyrocketing Value, Researchers Say https://nyti.ms/2l49aN0
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https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal
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https://www.cnbc.com/2021/06/09/ex-cftc-chairman-calls-for-more-regulation-of-tether-stablecoins.html
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https://youtu.be/WW1QNQ8fsEM
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Bitcoin Chart 2/23
https://www.kitco.com/news/2021-02-23/Bitcoin-daily-chart-alert-Bulls-getting-hammered-need-to-stabilize-prices-Feb-23.html
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Stock market 2/23
https://www.nasdaq.com/articles/stock-market-news-for-feb-23-2021-2021-02-23
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Stut Dog💵@stutdog
Shit, thanks bro. Its been in decline for awhile now. Its OVER.
Not forever I don't think but this, if it's pursued, will be a significant blow to the market.
Stut Dog💵@stutdog
Yeah I've been out for months now just watching. There is a massive correction/crash coming to crypto. This NY thing doesn't look good.
Sold out of all my crypto yesterday. I feel MUCH better investing in the stock market.
Most of my money was doing staking with stablecoins for high interest but the whole stablecoin industry will come under fire I'm sure and I don't want to be holding any of it when this drops
Tether is shady. USDC, on the other hand, (also a stablecoin pegged to the dollar in value ... 1 USDC = $1 USD) has been audited and found to actually have $1 USD on hand for each USDC they issue. So there is a good alternative to USDT.
Which makes it all the more confusing as to why USDT continues to be widely traded. I won't use it, myself.
Any time you invest, it's important to do your own re…See more
Yeah I really don't get why tether is the standard and usdc is an afterthought. I personally avoid tether but I don't think avoiding it is going to spare you the consequences. The problem with tether was that initially if you did your research you would have found that they had $1 for every usdt because that's what they said they had. They later amended to include cash equivalents.
There's also a provision in their agreement which allows them to not give you your money if quote liquidity dries up it's like the opposite of the FDIC
Well, if you did your research you'd have found that they *said* they had $1 for each USDT but you wouldn't have found any 3rd party audits confirming that. But, I do see your point, crypto is the wild west of the financial world and there is little to no regulation. Because of this, it is a risky investment and, while doing your research is helpful, it's not going to protect you from every possib…See more
And Bitcoin just dropped below 30k
Speaking of stop losses, lol
On a side note if you're invested in Tesla who bought a billion dollars worth of bitcoin you may want to reconsider holding them right now
Nit: Tesla bought $1.5 billion of BTC and sold 10% or more up until last week.
https://www.marketwatch.com/story/musk-says-tesla-sold-about-10-of-bitcoin-to-test-market-and-will-resume-allowing-crypto-transactions-when-50-of-miners-are-green-11623618853
I hate MarketWatch it has me on a permanent paywall
Nah, I didn't buy Tesla because they owned Bitcoin so I'm not going to sell because Bitcoin is going down. Nothing has fundamentally changed with Tesla.
Tesla has tons of cash. It's not like they would need to sell the Bitcoin at a loss to free up cash. They'll just hold it until it goes up again.
As Dennis pointed out, they have already made some considerable profit off that Bitcoin.
@k8thegreat well said 👏
I mean yeah Tesla was overpriced before they bought Bitcoin and now that they're hemorrhaging money because of it they're way more overpriced. Lol
I don't think they're hemorrhaging money due to BTC's fall unless they sell the BTC.
BTC falling to 20,000 would probably be the healthiest thing the market could do because we'd be retesting the high from last market cycle. Plus it would give me a chance to buy cheap bitcoin. Heh heh heh *rubs hands together greedily*
It's good reading.... I have enjoyed trading crypto but I, like many others are at a loss now. It's a good resource and you've done your homework 👌
You think the government will create a safe version of bitcoin that’s regulated? I still don’t understand the whole bit stuff. Digital currency might be the future but it’s very confusing at the moment
Sounds like when the government claimed they had all that gold they never had
Tonya@Guttersnipe
I tried to tell you ETH was lies.
GK
Just got out of it last week. When the dust settles, traditional investments always come out clean.
@tcardizzle not to mention China’s 🇨🇳broadening ban on crypto mining citing speculation risk and power consumption concerns
I know @coolhomelessdude and @nmodi have shared their thoughts on #cryptocurrency in the past, and I’m interested in getting their take on this post! 🤓
@echophaseSD I got concerned when they just continued being used after the NY ban. I had always heard about the crypto whale in 2017 that was driving prices but I had never heard that it was tether until I read that paper. The skeptics of the paper say that the one source could be an exchange and that exchange could be many people but tether owns an exchange bitfinex.. so that doesn't really change…See more
J
I get it been looking into it but let's say they look into it that's just tether people will put money in other legitimate coins and anyone coin can build up to be the next btc but I mean their are many different places moving towards btc and mining so there's that to each their own though but none the less good facts you brought to light
Tashi@tashidiki
🙌
The bigger thing that the Tether debacle shows is that the value of every paired asset may be inflated over true. Tether is one side of roughly 75% of trading pairs. Economist Mark Ranger has a paper about Tether, as well as some of the earlier Mt. Gox. and crypto capital cases. I still think there is a lot of uncertainty involved and wouldn't expect to see it completely implode. Markets can stay…See more
