BTCUSD suffered a(nother) tumultuous week when the Office of the AG of New York State announced a lawsuit against Bitfinex and Tether, two affiliated companies. Doubts have long existed about the bona fides of Tether and Bitfinex, but Tether remains the dominant stablecoin, representing ~96% of daily trading volumes in that category. Its status as the de factor ‘central bank’-issued medium of transactions has also given rise to its position as the single largest potential systemic risk for the cryptocurrency universe.
The stablecoin was then partly backed by a $900 million loan to an affiliate crypto exchange which no longer had sufficient funds to operate. BTCUSD proved remarkably resilient, and apart from a wicked stop-hunt that took prices down to the low $4,000s (in the process, taking out all sensible stops placed by recent longs), it has recovered to trade firmly above $5,100, as if not much ever happened. Bitfinex has accused the AG of filings “written in bad faith and with false assertions”. It will be interesting to see if there will be a run on the bank, and how Bitfinex/Tether/BTC ride out this drama. In the crypto world, nothing surprises.
The stablecoin was then partly backed by a $900 million loan to an affiliate crypto exchange which no longer had sufficient funds to operate. BTCUSD proved remarkably resilient, and apart from a wicked stop-hunt that took prices down to the low $4,000s (in the process, taking out all sensible stops placed by recent longs), it has recovered to trade firmly above $5,100, as if not much ever happened. Bitfinex has accused the AG of filings “written in bad faith and with false assertions”. It will be interesting to see if there will be a run on the bank, and how Bitfinex/Tether/BTC ride out this drama. In the crypto world, nothing surprises.