The Tethers Are Coming...

The entire reason Bitcoin exists and gets supported is to offer a solution to the problem of centralised wealth. Although the technology of the bitcoin does provide this the parties being involved do not. Exchanges like Mt. Gox and recently Bitfinex have demonstrated that the price can be manipulated. The latter one has been acting exactly like a bank, issuing money out of thin air. If you thought USD was a fraud, well imagine another fraudulent currency backing it. Ironically it is also issued as a kind of "reserve".

For those that haven't been watching the Bitcoin crazy ride, Bitfinex has been issuing Tethers aka something like Steem dollars which are supposed to be pegged against the U.S dollar. This happened because Bitfinex was cut off from the U.S bank system a few weeks ago. The result? People had over 600 million worth of USD but no way to cash them out. So their "ingenious" solution was to issue a currency that was backed from the U.S dollar which could be exchanged for BTC and other cryptocurrencies — but not USD.

Investigators like Bitfinexed have been demonstrating over the last few months that the Tether group along with Bitfinex (proved lately to be one of the same) have been trigger happy with the issuance of Tethers. In fact, every major pump of BTC was accompanied by a major a major issuance of Tethers. They have been effectively manipulating the same money moving it from one pocket to the other creating a fake volume out of thin air. And you guessed it right, many are trying to cash out their tethers but very few can.

A few hours ago Tether claimed that they have been hacked for about 5% of the $600 million tethers that they have issued. They have made some modifications on the omni wallet to disallow the use of the stolen funds but it is not entirely sure other exchanges will also follow. That means stolen tethers and real ones will be mixed and the actual value will be even more diluted. With no way out people will still pump bitcoin even more. The price right now does not even reflect a bubble. We are beyond "Alice in Wonderland" tier.

I believe the hack is just an excuse for this shitshow Bitfinex has been setting up. They got greedy and saw that they could print and buy as much Tethers and bitcoins as they want resulting in the crazy price we have been witnessing. When everyone starts rashing towards the door it is going to be ugly. The only positive thing about this is that CME is about to issue a clearance for Bitcoin futures which in effect will reduce volatility. The correction might take into consideration the fake Tether issuing. This means that the price will correct to about $3100 before it climbs back up to a healthy growth. Futures will not allow the tether scheme to keep the price so inflated and an elongated bear market might ensue.

After the Bitcoin correction drama I expect decentralised entities to gain more momentum but most alts will get REKT. Projects like 0x, Kyber, Cosmos, Wanchain and Cosmos will prove that they are the future of the blockchain since centralised entities in crypto suffer from the same problems as the one in the FIAT world. Decentralised exchanges and networks will be the future. I just believe that Bitcoin — the first envision of decentralisation — might have to act as a sacrificial lamb.