Tether is supposed to be backed by USD and other currencies in some bank account. Whether it is or isn’t only matters if you are holding Tether itself. If it is found that Tether is not backed by the USD then there will definitely a fallout in the Tether market, along with numerous investigations and probably some arrests as well, but we are making an assumption, and how will it affect the market even if it’s true. The NY Times did not have anything to offer other than “mystery” when they posted their article yesterday “Worries Grow That the Price of Bitcoin is Being Propped Up”. Let’s not assume for a moment let us state the facts.
#1 Bitcoin is NOT the only coin traded in Tether. So this statement is misleading to say the least. Around 60% of the Tether market is traded paired with bitcoin’ but the other 40% is among a basket of other currencies. I’m sure it fluctuates from exchange to exchange but bottom line its not traded paired with bitcoin only.
#2 Tether is simply a crypto currency “pegged” or supposed to be backed by the dollar.
#3 Tether is 0.4% of the overall crypto market cap and 0.7% of the alt coin market cap with a 2.2 billion dollar cap.
#4 It works just like every other fiat currency in which it is simply a median of exchange
Now lets assume Tether is a complete scam and there is not $1 USD in any bank account to back it.
Tether would lose 100% of it’s market 2.2 Billion dollar market cap instantly. Does this mean that Bitcoin’ is doomed? NO! To make a fair comparison ( TRX ) at one point traded around 24 billion in market cap. That market cap has been reduced to around 3.3 billion or a complete loss of over 20 billion in market cap. Is TRX’ a scam coin? Who knows but did that affect bitcoin’? No it only affected TRX’ holders. Same goes here. Now it may bring to light the corruption in the space which may adversely affect bitcoin’ and the market as a whole temporarily, but it does not change the fundamentals of bitcoin’. So it is simply a coin that is backed in faith by the faith of another currency. The irony! So in my opinion, unless you own Tether’ directly I personally am not worried and would use the fallout as a buying opportunity.
Another month and more rumors of yet another Country going to BAN Bitcoin’. But is this more FUD?
#1 This is old news dating back to November nothing new here
#2 Arun Jaitley (the Finance Minister) stated “Through multiple notifications, the two parties (the government and the RBI) have notified the public time and again that bitcoins will not be considered lawful or legal tender in India”
#3 The Government of India has formed a committee to regulate crypto currencies.
The key points being #2 & #3
“Legal Tender vs Being Illegal”
Being “illegal” and not being considered “legal tender” are two different things entirely. Cows are not “legal tender” in India but they are used for trade and barter. Just because a government does not consider it “legal tender” does not mean it is “illegal” to use or own. But they do try. India and China tried to ban Gold a few years ago, and even the United States banned Gold in the 30’s, all it did was force people to hoard. The best they can do is try and “Scare” people out, and accumulate the underlying assets which they have done in Gold and are probably doing in Bitcoin’ as well.
The Bottom Line: Countries use money as a form of control. If you think large and Central banks are not accumulating Bitcoin’ I leave you with this famous quote.
“Give me control of a nation’s money and I care NOT who makes it’s laws” Mayer Amschel Bauer Rothschild.