Tether, a financial monster or a legit business? It is hard to know what exactly is Tether doing. There is no independent audit performed to have a clear perspective. It is rapidly growing by printing USDT in every blockchain and has now reached 44 billion tokens in the market.
Each USDT is valued at one dollar. It is a stable coin with the purpose to have a stable price pegged to the dollar. How is Tether managing this is through an obscure mechanism, and with the ties to Bitfinex exchange. Bitfinex and Tether are one and the same. And it is Bitfinex that stabilizes the price of Tether to be 1:1 with the United States Dollar, with cooperation and ties with other exchanges.
Tether is not always printing. In 2018 it had to burn a 10% of it's USDT supply, as the market was turning bearish and interest in cryptocurrencies was fading. Since there is no audit for Tether we can only assume that it is not backed 1:1 with USD or other assets as the Tether website is describing.
Tether is accused with clear evidence of market manipulation and unregistered lending of billions of USDT, described as equal to the dollar. It is growing so fast that it will reach 100 billion USDT probably during this summer and it is a nuclear ticking bomb for Bitcoin.
In one of my previous articles, I described why the crypto market is in a bubble. (How To Spot A Bubble)
It is not just a bubble driven by retail and institutional investments, not just FOMO, but also a huge market manipulation performed by players that have the infrastructure and technology to perform it in a 99% unregulated market. The market is Tether infested. Since 2017 the fake volumes in exchanges were reaching 99% on an average daily trading action, even in the top exchanges. Spoof orders, washtrading and money laundering is a large part of the exchange volumes, while real trading is not even 10% of the volumes we experience today.
Tether is the transformation of the Karpeles Willy-bot, that was used to pump the price on MtGox and as the Willy-bot, Tether is not going to last for too long.
The Trololo chart was created very early, I think it was during the 2013 Bitcoin bubble. It demonstrates algorithmically what we know about the Bitcoin price cycles and gives us a good idea on what is coming.
The peak of this bubble can be in three months as Marc DeMesel explains, but it can also be just a month away. I have been planning for both posibilities, as we have to secure our investments from the indisputable fact that this market will collapse in the short term.
There will be ridiculous prices again, and there are too many signs of a bubble. Read my post "How To Spot A Bubble" and find out why. The game of selling the top intensifies as FOMO spreads and real volumes and speculation increases.
However it seems that always in the middle, it is Tether:
Behind the Bitcoin Bubble - Wall Street Journal
Is Tether Just a Scam to Enrich Bitcoin Investors? - The New Republic
Tether's Credibility And Its Impact On Bitcoin - Seeking Alpha
Tether represents a significant risk to the cryptocurrency ecosystem and if Tether is significantly underfunded it could damage the reputability of cryptocurrencies.
To conclude this article I will be doing so with a quote from the movie "The Big Short" that seems to be very appropriate for the current market conditions:
It Ain’t What You Don’t Know That Gets You Into Trouble. It’s What You Know for Sure That Just Ain’t So
My plan during bull runs is to deinvest in steps and not be speculative and greedy. It is not financial advice, it is how this programmed money works. Today's euphoria will be blood and tears on the street a few months later. It happened before, it is bound to happen again. I will be patiently waiting in the sidelines and grab the next opportunity when it arises two or three years later.
Thanks to those that read and support me.