Since the low of March 2020, when the rate dropped to the 3800 area, it has grown more than 10 times almost reaching the mark 42,000 (at the time of writing).Where did these cosmic figures come from, did everyone believe in digital gold, “store of value”. Let's consider in more detail what is happening on the cryptocurrency market and why what is happening this time really looks like a pyramid.
Lately, we see headlines very oftenvarious media (not only specialized ones), which constantly report about new maximum bitcoin: $ 30,000, 35,000, 36,000, etc. often forgetting to mention or simply not paying attention to what kind of dollars we are talking about. Naturally, not about Australian or New Zealand, but about USDT, the difference is only one letter, but it is crucial. This topic has somehow already flashed, but did not cause much discussion. Now, against the backdrop of mania, it is raised only mainly by various “conspirators”.
Let's start with what the company itself says. USDT (tether) is a token that is pegged to a dollar (electronic dollar), as reported on its website.
Every tether is also 1-to-1 pegged to the dollar, so 1 USD ₮ is always valued by Tether at 1 USD.
However, they do not even hide the fact that there is no 100% reservation in real dollars.
Every tether is always 100% backed by ourreserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities (collectively, “reserves”).
Let's look further
The coin is operated by Tether Limited.registered in the British Virgin Islands, whose regulators are loyal to crypto startups. The website of the project does not contain the address of the company's office - only an indication that it is located in Hong Kong.
On the website and in documents, Tether emphasizes thatUSDT is not money, it has no real price and the firm is not obligated to guarantee the value and security of each token. Also, the company has no obligation to return US dollars to users and it reserves the right to refuse service and compensate for losses to users who have violated the user agreement. If Tether goes bankrupt, no one will return the funds to users. (a source).
Such a superficial assessment already raises questions. As we can see, even from their words it is said that there is no 100% collateral in dollars. An independent audit was not carried out either.
This situation has long gone out of the planeusual suspicion and is the subject of legal proceedings and scrutiny by the US authorities. In April 2019, a Tether lawyer admitted that the coin was backed only 74% by cash and “equivalents”. In October, a class action lawsuit was filed in the US District Court for the Southern District of New York against Bitfinex, Tether and parent company iFinex Inc. And already in September of this year, the regulators again “tackled” them.
The company that issues USDT tokens has been in court since 2019, but it still has not provided the information required by the US authorities. (a source).
The RIPPLE example shows that this time things can be much more serious.
Next, let's move on to charts
At the bottom of tether capitalization
It can be seen that in the second half of 2017 and the first of 2019, an increase in capitalization contributed to the “last spurt”, but these are trifles compared to 2020.
After the collapse, the market began to graduallyto recover, as usual, and it happens in extremely pessimistic moods. On March 31st, the first batch of "doping" was introduced, approximately 1.6 billion. Total: in the period from March 2020 to 01/13/2021, capitalization increased from 4.65 billion to 24.23 billion!
This managed to stop several attempts.reversal on November 25 and January 3, “flooding” massive forced liquidations of long positions, and the largest one took place on January 10 and, apparently, it will not be possible to cope with it (we will consider this question at the end).
Problems can start in two cases 1. When investors start to massively exit USDT into real dollar. 2. When the regulator intervenes seriously.
Tether CTO Paolo Ardoino recently announced full provision and other successes, but apparently they are not going to do an audit.
However, in the rules on the site itself (paragraph 3) it is written in direct text that in which case the company does not owe anything to anyone.
There are other alternatives to USDT like PAX (also a digital dollar). The company is SEC approved and PAX is managed by New York State. PayPal works with them and there is no such uncontrolled emission.
The above facts point to serious concerns about potential price manipulation attempts and fraud. It may well be that 40,000 USDT inreal dollar only 29,600 (if you take 74%) and then with the condition that things are not even worse. However, this does not mean that you need to completely forget about the cryptocurrency market with its capabilities and disadvantages, since bitcoin is the same speculative asset as many others, only with much lower liquidity.
Some may ask the question:and then the technical or wave analysis, if such manipulations occur. As has been said more than once before: TA helps to understand the psychology of investor behavior in charts and figures. If the market is not ready for a phase transition, some manipulation can really push it, in the VA this can be displayed by wave extensions. But when the subdivisions are completed, and a clear impulse has gone down, no intervention will save you. Let's remember last spring, when the Fed made several attempts to flood everything with new money, but the market fell further and stopped only when the crowd sold everything or was in shorts, which is a signal to change the trend, as well as TA indicating a reversal. Then the “fresh money” came in handy - the market was ready for it.
The situation is similar on the crypto market: when the “global” impulse goes down, the mood will change from buying at any price to selling at any price, and no printing will help here.
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