No, One Whale Did Not Move Bitcoin To 20k...


market-manipulation.jpg

If you follow the crypto news circuit you've almost certainly seen this little gem circulating. I've personally seen over 2 dozen articles in the last couple days reporting on this new 'study' that makes the claim that Tether and Bitfinex were responsible for the 2017 run up to 20k Bitcoin. I remain thoroughly unimpressed.

Embarrassed even.

How can so many people so far up the chain have no idea how these basic mechanics operate?

But why did Bitcoin go up every time new Tethers were created?

omfg...

Because the demand for Tether and Bitcoin increased

AT THE SAME TIME.

manipulation puppet strings.png

The novel concept that no one seems to consider.

Everyone is just assuming that because Tether is traded for Bitcoin, then when Bitcoin goes up demand for Tether 'obviously' goes down.

Uh... no.

What? Seriously what? You know, whatever... maybe it's because during the bear market the opposite was quite true. As Bitcoin crashed and the alt market was completely stomped obviously Tether was gaining demand as a safe-haven asset. I'm guessing many people saw that and assumed the inverse was true.

It's obviously very suspicious if you think Tether should have been burned during a time when it was being created. It should have been a testament to how powerful that run up really was, but instead everyone just decided it was manipulation after the fact when they were salty as fuck about the bear market crash. Gotta blame someone that isn't you, amirite?

Liquidity

Okay, so Bitfinex prints a bunch of Tethers that aren't backed actual dollars in the bank. They are going to use these fake Tethers to artificially increase the price of Bitcoin... because reasons. I mean, why wouldn't you make an extremely risky play like that when the market is already extremely bubbled?

So Bitcoin is 10k and Bitfinex is buying Bitcoin at 10k with funny money. Say they push up the price to 15k. Now a bunch of rando peeps out there have Tether from selling at 10k-15k. Bitfinex can't stop these people from dumping the coin back onto the market, in which case they'd be forced to buy it back up.

Now the question we have to ask ourselves is:

Did Bitfinex turn those Bitcoin into dollars in the bank like good little boys and girls? Or did they gamble on the market? The answer is largely irrelevant. They obviously have the money to back it up. Why is everyone so worried about Bitfinex is running a 90% backed fractional reserve when every other bank out there is 5%-20%?

tether-bitfinex.jpg

Did Tether ever significantly break its peg during this time?

Not really. In fact, the biggest divergences in the peg occurred when Bitcoin was trading flat and everything was boring. This break was caused by the actual fractional reserve holding the money being an actual fractional reserve and had nothing to do with Bitfinex; but instead with the bank they were using to provide USD liquidity.


Wouldn't we expect the peg to be broken if they're literally dumping billions of fake tokens on the market? Why is no one explaining these logistics?


Tether = 2.5% of Bitcoin's Market Cap

Tell me again how this micro-asset sent Bitcoin soaring.

That would be like saying Litecoin spiked Bitcoin.


https://ipfs.busy.org/ipfs/QmcXUC6CD5kv6Em3cPedqtyuVtWb3XwT5KYCGo9NMDTTxU

What did Bitfinex have to gain?

This is the main concern that really annoys me. Everyone says Bitfinex did it, but no one says why they did it. Shouldn't there be a pretty damn good reason that we should have already heard about 100 times by now? I'm still waiting on that front.

Why is this story constantly being shoved down our throats?

This is an even more important question. Who gives a shit about Bitfinex? What happens when an actual central bank starts manipulating Bitcoin price? Shouldn't we be worried about that like... a lot more? Considering how easy people are saying Bitcoin is to manipulate, you'd think so.


Could it be that the ones who have the most to gain here are central banks? Let Bitfinex be an example for any stable coin operator that would dare run a fractional reserve without their permission.


Not just me...

I'm not just talking out my ass this time. This post was sparked from several other articles that I read to the contrary of the mainstream view.


get-out-crypto-whale-theory

Let me just say for the record, there is no methodology on the planet that will convince me that this narrative is accurate. The simple matter is that I personally witnessed the 2017 rally, as did many of you, and it wasn’t anything that could possibly have been caused by any single whale.


In those few months, millions of verified retail accounts were opened here at eToro in order to trade crypto and it was the same throughout all exchanges, many of which had to stop accepting new clients because they simply couldn’t keep up. Servers crashed under the weight of the sheer traffic and the attention in the media was overwhelming.


It was a matter of unabashed enthusiasm for tens of millions of people around the world. I’d not seen such mass excitement surrounding an emerging industry since the birth of the internet. Now you want to tell me that the entire rally was the result of a single whale?!

Get out of here with that!

Who else remembers how crazy it was?

None of the exchanges could keep up.
Everyone was complaining how shit they all were
because of all the shear volume and FOMO of everything.
"It took Coinbase tech support a month to respond," and all that.


crypto-execs-say-one-investor-did-not-manipulate-bitcoin

“Their ‘research’ is based on an elementary misunderstanding of how financial assets work. It’s like saying that GLD (gold ETF) is traded mostly by 1 person because it has a single custodian and a single entity handling creations and redemptions,”


did-the-bitcoin-bubble-come-from-one-bitfinex-tether-trader

There’s a lot at stake — the research study is cited as key evidence in a $1.4 trillion class action lawsuit against Bitfinex and Tether.


According to Jeremy Allaire, Co-founder and CEO of Circle, the Tether study makes the mistake of attributing a custodial account address to a single trader (although the authors maintain that this is an individual deposit address). Exchanges pool customer funds into a single wallet before netting and batching transactions with partner institutions; traditional banks do the same. A single Bitfinex wallet could easily represent the aggregate trades of many customers.


They suggest that Tethers were issued to provide artificial price support. While the issuances do seem auspiciously timed, it may simply be that Tethers are issued in response to user demand. Kraken, another cryptocurrency exchange, has previously noted that Tether issuances positively correlate with their own cash deposits. Every Tether issuance is publicly reported on the blockchain, and traders use bots to algorithmically trade on this information. No surprise that Tether issuance can amplify demand for Bitcoin.


Tether doesn't need to be 100% backed.

Just ask literally any bank, including the ones backing all those Tethers.
Tether clearly doesn't even need to be 50% backed to be fully legitimate.
Fiat is a product that has allowed these manipulations since inception.

Conclusion

I've read a lot about this topic and the general consensus is that Bitfinex must have done it because Bitcoin price went up every time new Tethers were issued. Nobody tries to explain the motive. Nobody tries to explain the logistics of the market. Cause and effect: I saw it so it must be true. This entire debacle is completely asinine. Who cares?

More importantly, why is this story getting so much attention?

I've never even used Bitfinex or Tether.


Comments 9


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06.11.2019 01:04
1

Asia uses it. Lot of money in and out of China has been using tether, at least that is the theory.

06.11.2019 01:32
2

Indeed, it is a major exchange, after all.

However, when I take a step back and look at the world economy as a whole,
I feel like Bitfinex is the least of Bitcoin's problems.

06.11.2019 01:41
0

I think I understand I agree that there are other forces to work here.

06.11.2019 04:32
0

I must admit to laughing about your comment about Tether being accused of Fractional reserve banking at 90%. It’s better then then the Banks 10% lol 😂
✍🏼

06.11.2019 04:34
1

This story gets so much attention cuz our Information Inputs are completely centralized and hijacked.

I wouldnt say that one single whale pumped the market but one entity/group sows these rumors via their centralized mainstream media. They can even instrumentalize alternative media.. Cuz they just believe..

06.11.2019 07:35
1

Most banks only have around 2% fractional reserve..

Posted using Partiko Android

06.11.2019 07:37
1

Greetings friend @edicted.

The relationship I find of Theter with BTC is that Theter runs on the BTC blockchain, but it is not a fork, it is a stable currency backed by fiat. BTC does not have fiat support.

Now, how can an exchange create fake Theter? This part of the story was not clear to me.

Bitfinex's history is very dark in terms of the security of its clients' assets. Many cases of theft.

Could it be that the ones who have the most to gain here are central banks?

This theory is logical, especially if we look at the fact that Theter only needs more proven fiat reserves to increase its current assets. Then there could be a manipulation of the crypto market with the intervention of traditional banks. This is unfortunate especially when we remember that crypto was adopted as an alternative to the financial structures established before the appearance of BTC.

Thank you for sharing this interesting article.

All best, Piotr.

07.11.2019 01:32
0

Also, the logic of the study that assumes one hot wallet at Bitfinex represents one trader is so extremely thin. It's ridiculous. With that logic, one is arguing that Binance has 4 big traders. That's it. Or however many hot wallets they keep.

08.11.2019 11:24
1