Bitcoin Approaches $7K Level As Tether Sells Off

Galtero Lara
Octubre 18, 2018

This caused a massive whipsaw in prices yesterday - with other exchanges experiencing a similar drive up in Bitcoin. This led to the exchange halting all fiat deposits temporarily. The move higher in bitcoin came at the expense of Tether (USDT), the stablecoin on the Bitfinex exchange, which traded to 88 cents.

Around the same time, Bloombergsuggested that Bitfinex had created a complex structure involving third party Panamanian bank accounts in order to maintain banking access and keep their operations online. The only exception to this has been the USD-pegged stablecoin Tether (USDT), which fell by as much as 8%, as its crypto peers surged. Prices for the coins have historically stayed near USA $1 because Tether tokens are allegedly tied to the U.S. dollar, with the eponymous company behind them claiming that it has a dollar in its accounts for each token it issues.

Tether is up slightly in early trading today, but still below $1 after going as low as $0.85 on Monday.

According to CoinMarketCap, Tether (USDT) experienced a drop, reflected by a 5% increase in Bitcoin (BTC).

It's not always conceivable to buy crypto including Tether right away using dollars. Tether and Bitfinex have dodged many bullets in the past.

Bitfinex claims it is not insolvent despite the stream of media articles claiming so.

Questions surrounding Bitfinex and Tether are nothing new. "Such price supporting activities are successful, as Bitcoin prices rise following the periods of intervention". That appeared to calm markets somewhat, with Tether paring some of its losses and Bitcoin giving up some gains.

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But Tether has never produced an audit showing it has the purported reserves. Ties between Friedman LLP and Tether were dissolved, only furthering the skepticism surrounding USDT. In effect, Tether claims they went and got the next best thing - a legal memorandum.

At the time, global exchange rates for BTC prices hit an average high of $6,960, the highest in the last five weeks.

During the first half of October 2018, Tether pulled out hundreds of millions of dollars worth USDT tokens in circulation. In a Medium post after several hours of market turbulence on Monday, Bitfinex said that withdrawals from the exchange were being processed as usual even though fiat-currency deposits had been paused for some users.

Binance has clarified that they do not have any plans of delisting Tether amidst rampant rumors and volatility.

"I hope some Tether person writes up an insider's description of what is happening behind the scenes right now as the peg fails".

This - combined with complications with withdrawals and deposits on the cryptocurrency's sister exchange, Bitfinex, plus rumors of banking issues - could provide an explanation for Tether's price drop.

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