Enormous Crypto Pump Is Coming!
Bitfinex and USDT Are Involved Again!
Conventional wisdom says that USDT is not backed by anything. Bitfinex was printing it last year almost nonstop and thereby pumped the entire market. Their scheme was simple: using newly minted Tether coins they pumped altcoins selling shortly thereafter for Bitcoin, and as a result an average Joe was left with altcoins he bought at elevated prices. The entire crypto community discussed this subject numerous times: cointelegraph.com.
Prices have been going down for almost the entire year, and manipulators had to do something to start making money again. Now they can’t simply stick to the old trick: issuing USDT while under regulator’s investigation would be very bold and dangerous. One would think, the game’s over.
However, it isn’t! Let’s review the course of events that occurred in the last couple of days.
Note: This article represents a private opinion of Anatoly Radchenko, United Traders’ Managing Partner.
USD Lying Dormant
Well, on November 11 Bitfinex’ official website published an announcement that all fiat withdrawals will be subject to a 3% fee applicable after two withdrawals within a calendar month if the monthly total exceeds $1 million. One could think, it is all about AML/KYC and stuff like that. But don’t rush to conclusions just yet.
Another news is out November 27 from the same newsmaker: now everyone can exchange their USDT for USD. Yeah, cool! BUT! At 14:30 UTC all USDT balances of exchange users will be forcefully converted into plain USD.
And while USDT is a meaningful coin — you can send it to other crypto wallets, buy crypto on almost any exchange, etc. — USD on your Bitfinex account are only some recorded numbers. And here’s why:
- You can’t send USD to any exchange, you can only withdraw it through Tether after completing KYC (and paying the enormous 2–3% fee plus withdrawal limits).
- If you want to withdraw to a bank account, you’d have to pay higher fees, explain the origin of your USD to your bank and specify the tax agent, etc.The bank is very likely to return the payment.
And here’s the real kicker: why is Bitfinex doing that?
This time they simply seized everyone’s USDT in an arrogant and aggressive manner claiming it’s USD and you can do anything you want with it. By the way, it is hardly a coincidence that the majority had their money exactly in USDT at the market low. At one point, people will realize they can’t do anything with their USD other than buy Bitcoin.
Market manipulators will start driving crypto higher, people will push their panic buttons and start buying, and manipulators would pump it even higher, 15%, 20%, 25%, etc. Which would trigger the real FOMO: Bitfinex would end up having an elevated exchange rate as it was the case with BTCE some time ago. Just compare BTC prices on Bitfinex and Binance, for instance: the spread has always been 0.2%, and now (as at the time of this writing) it is almost as high as 1.5%. And this trend will continue: Bitcoin price can be $5,000 on Binance, and $5,800 on Bitfinex. Cryptos have just gained 20% vs the recent low and continue going up, while some people haven’t realized yet they have USD on their accounts rather than USDT. They’ll have a hard time trying to buy Bitcoin at higher prices…