
Worries Grow That the Price of Bitcoin Is Being Propped Up - atarian
https://www.nytimes.com/2018/01/31/technology/bitfinex-bitcoin-price.html
======
jboggan
'But Mr. Krug, at Pantera Capital, said that if Tether were really being used
by investors, they would probably also want to buy new Tether when the markets
were going up, which has not been the case. Also, they would not always want
it in exact increments of $100 million, as has been the case.

“After you see this enough times, you just start to wonder what’s really going
on here,” Mr. Krug said.'

I'd listen to the folks at Pantera, they are pretty sharp.

~~~
AznHisoka
... and they happen to own several crypto hedge funds.. wonder what their
strategy is if they think something suspicious is happening.

~~~
thisisit
To spread FUD so that prices are lowered and they can buy coins cheap?

Edit: So looks like attempt at humor lacked the /s tag attracting downvotes.
So let me clarify, the answer to the above post asking "what will do they
next?" If they believe in cryptocurrencies they will buy more if the prices
are cheaper.

~~~
hyprCoin
This reads like a conspiracy theory but please pause for a moment and consider
why a financial company involved in cryptocurrencies would spread concern to a
highly read news outlet. Either they:

1) Are scared that tethers can crash the market and want to flush things
sooner than later

or

2) It's part of a disinformation strategy to move the market where it's more
profitable.

There are very few rules and regulations around cryptocurrency so I'm betting
on #2.

~~~
tinymollusk
or

3) it's a single individual sharing their opinion

or

4) they believe it will help their overall reuputation after a crash, so
customers who bought and got crushed will think "man if only I had listened to
them"

or

5) it's someone with a personal grudge against crypto -- they made a private
market short with an accepting party

or

6) it's space aliens who know crypto is the secret to super-luminal space
travel and they want to sabotage humanity's efforts to reach the stars.

There is very limited evidence to prove that it wasn't space aliens. That's
all I'm sayin'.

------
cdetrio
The article links to tetherreport.com

> _We vary N from 1 to 24 hours and examine the p-values. [.....] there are a
> number of periods where the p-values are significantly below 0.05 and we
> reject the null hypothesis for those periods._

Is it p-hacking to vary N and find low p-values? If its not p-hacking, but a
valid analysis with predictive power, then wouldn't it make a good trading
strategy to watch the tether wallet and buy btc whenever new issuance happens?

~~~
sudouser
just look at the weekly chart and you’ll see a peak pattern. another pattern
can be seen in the daily chart, flat periods that don’t exist on stocks like
Nike or apple

------
olivermarks
"Long before news of the subpoena, Bitfinex, which is believed to host more
trading than any other Bitcoin exchange in the world, had gained a reputation
for a lack of transparency and a confusing structure, with European
executives, offices in Asia and registration in the Caribbean."

Oh boy this sounds like the banking system I was hoping cryptocurrencies would
supersede...

~~~
atomical
[http://www.businessinsider.com/40-percent-of-bitcoins-are-
he...](http://www.businessinsider.com/40-percent-of-bitcoins-are-held-by-
just-1000-people-2017-12)

> According to AQR Capital Management, about 1,000 people own 40% of the
> world's bitcoins.

I'm not sure having bitcoin oligarchs will work out great.

~~~
sekh60
You will like this headline from The Onion: [https://www.theonion.com/bitcoin-
on-path-to-functioning-just...](https://www.theonion.com/bitcoin-on-path-to-
functioning-just-like-real-currency-1821128169)

~~~
olivermarks
[https://youtu.be/QKO6IChjojI](https://youtu.be/QKO6IChjojI)

------
thisisit
> Also, they would not always want it in exact increments of $100 million, as
> has been the case.

Not to question the Tether story but I don't understand this line of argument.
What is the problem with exact increments?

Sure, the tokens have to be issued only if the issuing conditions are met. But
given the number of hacks, wouldn't people want to use the issuing account
sparingly? You know, use the issuing account to issue tokens in fixed
increments to build up reserves. The move these reserves to be held in another
account.

~~~
tim333
The theory behind tether is it's backed by US dollars so if investors send in
1234 usd they should be held in reserve and 1234 tether issued against them.
If they are issuing them in lots of 100 million it suggests they were not
bothering with the whole receive dollars from investors and hold them bit.

------
brosirmandude
If tether pops, what happens?

Do people try to cash out immediately or do they flock to the "stable" coins
like BTC or ETH?

To my knowledge the only thing you can trade tether for is other
cryptocurrencies.

~~~
ErikAugust
We have Coinbase/GDAX, and now Robinhood and Square Cash doing BTC (and other
currencies) to USD, so that's becoming a legitimate option.

I've always wondered though - how do you move multiple hundreds of thousands
of dollars worth out to fiat in a single instance? Is that possible?

~~~
wmf
_how do you move multiple hundreds of thousands of dollars worth out to fiat
in a single instance?_

Doing a trade of that size is no problem; you just enter it. Getting the money
out via ACH or wire would require being pre-verified and upping your limits.
AFAIK Gemini has higher limits than Coinbase/GDAX.

------
jchook
No way. When you look at the daily volume of the Bitfinex exchange, it is
large... but not that large.

------
neuro_imager
Enough of this already...

If Tether doesn't have the funds then its a lot like someone borrowed 2Billion
to buy crypto and can't pay it back.

Bitfinex will die, tether will die (just like other scam currencies like
Bitconnect) but the market will come back after a correction.

------
mattcaldwell
Tether's market cap is around $2b... the crypto market as a whole clocks in at
over $500b right now... what kind of effect could Tether really have, beyond
the inevitable panic that will ensue?

~~~
thisisit
The fallacy around marketcap is well explained the above post. Or check the
link:

[https://news.ycombinator.com/item?id=16279591](https://news.ycombinator.com/item?id=16279591)

~~~
mattcaldwell
That doesn't actually apply here, does it? If $2B is an inflated market cap,
that's good for everyone.

~~~
thisisit
The idea presented in the post is simple - marketcap is based on the last
trade. So it is an unreliable indicator.

True measure might be something like liqudity and exits. What happens if the
liquidity shifts or exits to fiat disappear completely? Like I pointed out,
currently USDT is connected to 15% of liquidity in BTC:

[https://news.ycombinator.com/item?id=16279642](https://news.ycombinator.com/item?id=16279642)

Or as MekaiGS said the whole thing will depend on exits:

[https://news.ycombinator.com/item?id=16279618](https://news.ycombinator.com/item?id=16279618)

~~~
mattcaldwell
I'll agree that the whole thing will depend on exits.

------
monus21
So what is the likely outcome of the fallout of Tether and Bitfinex? I'm
guessing the price of Bitcoin will fall drastically?

~~~
josephagoss
As bitcoin is quite impossible to value via traditional methods it's very hard
to say where the price could end up after a tether pop.

I've heard many in the cryptocurrency space throw figures around such as
$1,000.

I fear that the crash would be far lower. The argument is that the entire run
up is fake therefore a realistic price would be back around $100.

~~~
monus21
I can see this happening. Sucks for everyone who bought in at $18K.

------
ucaetano
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~~~
dang
Please don't copy and paste from other threads.

The comment itself is sort of a rehashing of by now ultra tedious material,
too. You're far from the only one rehashing it—pun intended—but it would be
good if everyone doing it would stop. Repetition is the leading anti-value of
this site.

~~~
ucaetano
It isn't re-hashing, I actually copied and pasted my own comment, verbatim.
And with good reason.

Despite the humorous tone, my comment is about how easy it is to manipulate
prices in unregulated, anonymous markets. It might sound like a joke, but it
isn't, and it relates to the article in question.

But I'll put it in different wording: in an anonymous, unregulated market, it
is very hard to validate transactions as being between unrelated parties, and
therefore easy to manipulate prices.

~~~
dang
Yes, please don't copy and paste on Hacker News. We're trying for thoughtful
discussion here. Imagine what would happen if everyone did that!

HN is an internet forum where we're trying to find and talk about interesting
things. Once something has been repeated enough times it ceases to be
interesting. This is incompatible with the intellectual curiosity HN exists
for
([https://news.ycombinator.com/newsguidelines.html](https://news.ycombinator.com/newsguidelines.html)).

What makes this so difficult is that repetition is its own form of pleasure
and doubly so when indignation is excited. My dream is to get all of us on HN
to be aware of this dynamic so we can focus on curiosity—which has quite a
different texture—and steer clear of the tedious.

The points you're repeating about Bitcoin have been commonplace for a long
time now, and the jokey format dilutes quality further. You're not the only
one doing this, but the copy-pasting thing is bad. As if these threads weren't
repetitive enough already!

------
sjg007
I really want bitcoin to succeed because it really is a great way to take back
the power from corporations and the plutocracy we find ourselves in today. The
fixed pool of bitcoins is slightly problematic.. would it not be better if the
pool increased at 1% a year or so..? Gold made sense as a reserve since it
formed a quorum among the various economies. The dollar makes sense now but so
does bitcoin. The only issue I can't resolve is the deflationary impact of
hodling since there will only by 21 million coins.

~~~
wmf
In reality, a small number of early adopters are trying to set up a new
crypto-plutocracy with themselves at the top. You're the sucker at the table.

------
atarian
@dang, this story was on the front page and then just disappeared. Was it
removed intentionally? And if so, what was the reason?

~~~
CamelCaseName
Bitcoin stories generally seem to disappear from the front page rather
quickly.

If this weren't the case, HN may find itself completely buried by this topic,
as well as the spammers that come with it.

------
jacquesm
> Worries Grow That the Price of Bitcoin Is Being Propped Up

Never looked at the NYT as a satirical publication.

