Is Tether One of the Reasons Bitcoin Fell?
The price of Bitcoin has fallen considerably recently, dropping from the 20000$ high set at the end of last year to 6000$ today.
According to the international press, the rise in the price of Bitcoin was artificial and supported by the cryptocurrency Tether, whose purpose is to facilitate conversion between fiat currency and virtual currency and back. Its rate is closely linked to the US dollar, meaning 1USDT=1USD.
The decline may be caused by the actions of the Bitfinex Exchange, which is accused of buying Bitcoin in large quantities using Tether, which drove the price last year to the 20000$ high!
Tether Limited (the company that issued Tether) promised to make its audits public, but so far refuses to do so, claiming that Tether is backed by Dollar.
Tether is used by many Exchanges and is very popular, reaching a capitalization of 2.2 billion dollars. Tether must hold in its own reserves an amount of dollars equal to the amount of Tether in circulation, but it has not provided any proof so far. Skeptics question whether the money is actually there, writes Bloomberg.
The Links Between Tether and Bitfinex
Tether and Bitfinex do not disclose on their websites or in public documents where the companies are located or who their representatives are. One spokesperson for the firms stated that Jan Ludovicus van der Velde is the CEO of both companies! There is also little public information about how Tether cryptocurrencies are created.
A document published on the Tether website, prepared by the accounting company Friedman, shows that it had 443 million USD and 1590 EUR in its bank accounts as of 15.09.2017. Tether coins were valued at 420 million USD that day, according to coinmarketcap. Tether did not specify the banks where this money is located.
Investor Fears
If there are not enough reserves in the bank, then the price of Tether could collapse, which would also mean a massive drop in the price of Bitcoin.
Also, because many Exchanges use Tether specifically to buy Bitcoin, a fall in the cryptocurrency's price could lead to the closure of some Exchanges.
Conclusion: Although Bitcoin was created to be used for peer-to-peer transfers, due to the high interest shown by investors, various possibilities are also found to manipulate the price of Bitcoin in the personal interest of different companies. This should make us more cautious and prepared for any situation that may arise, and should make us correctly calculate the risks to which we may be exposed.
Source: startupcafe.ro
Translated from the Romanian original with AI assistance.