While positive industry developments and ’s recent price action have lifted the entire market to over $188 billion, does the USDT debacle cast a shadow over a prospective long-term trend reversal?
There have been a plethora of reports pointing towards clear institutional over the last couple of months, which in all likelihood is a contributing factor to the recent 4-month long price spike from fundamental perspective. Indeed, more liquidity means increased trader confidence, bumping up transaction volumes which in turn have been historically indicative of increased green candle activity. Considering the widespread view that traders “buy the rumour and sell the ”, it’s interesting to see this upward price-action flying in the face of contemporary market trends.
Indeed, are climbing quite quickly, with the top dog of digital currencies topping out at $5,800 as per figures from . Taking an overview at the broader picture, one can see a clear ongoing rally since the initial spike in April and the great crash of November and December. Whether it’s Facebook’s suggestive moves towards stablecoin integration on Whatsapp (presumably similar to WeChat), JPM Coin, EY’s Nightfall launch on or for an internal -based , the market seems to be reacting to a series of confluent factors that all point to reinvigorated market confidence. More over, as per a — which has a noteworthy track record of sniping long-term bottoms — is currently hugely undervalued in the grand scheme of things.
The USDT debacle
That said, one cannot exclude the grim reality that is Bitfinex’s recent confirmation of fractional reserve banking. The general counsel of Tether Limited confirmed in written evidence that only 74% of stablecoin USDT is backed by reserves, and were not notified of this fact until now.
In addition, on February 27, Tether Limited took the sneaky route and quietly adjusted its USDT collateral policy to include other assets and future receivables from third parties alongside cash and cash equivalents. This pretty much completely annuls Tether’s fundamental 1:1 claim with the US Dollar. Needless to say, this is bad practice 101 and it wouldn’t be at all surprising surprising that we are witnessing another in the making.
This comes as the New York’s attorney general accused Bitfinex of hiding a loss of about $850 million in client and corporate cash. In response to these allegations, Bitfinex insists the funds haven’t gone missing but that the exchange money was deposited with a Panamanian-company called Crypto Capital and through no fault of their own, seized by government authorities in the U.S., Poland, and Portugal.
It’s worth noting that USDT still has 75% , so if the U.S. government were to forcibly close down Tether’s operations completely then that wouldn’t bode well for anyone with skin in the game.
Truth be told, if Tether doesn’t find a way to materialise these funds and conduct a formal and recognised audit, then it’s only a matter of time before this house of cards comes crashing down.
Technical picture
From a technical perspective, faces heavy resistance at the $6,000 level which previously held as support for a 9-month stretch last year. On the flip side, short term support can be expected at the $5,300 and $4,800 levels. Many traders are naturally eying the golden cross, which is when the 200-MA (or EMA) crosses the 50-MA — often indicating a more sustained uptrend.
Meanwhile, the RSI trend line present since November of 2018 has been marginally breached, indicating that a correction of sorts is overdue.
Published at Sun, 05 May 2019 08:47:18 +0000
