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On today’s show:
Crypto prices dip again because Tether has finally gotten itself into trouble with US regulators and traders got spooked.
**Story – Bitcoin Price Pattern** 0:42
Charts provided by Coinigy: https://www.coinigy.com/?r=16171fe8
So let’s revisit this descending triangle we’ve been talking about.
The bottom line is that it’s still in play and I can only see room for a maximum of 7 more candles that could possible fit inside the pattern.
So one way or another I’ll have to redraw this within a week.
Now this pullback to 10,000 could have been because of pure technical levels as this consolidation continues, however we know there has been some news that most likely spooked the market, so let’s go onto that.
**Story – Tether In Hot Water** 1:35
The first thing that may have spooked the market is Tether, a cryptocurrency designed to have a stable value.
The purpose of Tether is to allow you to move your wealth into a price stable asset without having to go through the pain and the fees of converting back into fiat currency.
It’s a very attractive offer which is why you see here in red, .6b worth of Tether has been traded in the last 24 hours.
That’s a lot when you consider there’s only .3b worth of Tether in existence.
This is supposed to work like Casino chips. Not in the sense that you’re supposed to gamble with them, but in the sense that you put your money on deposit and are given chips that can be later redeemed.
Tether is actually a company based Hong Kong with offices in the USA.
You transfer say 0 to Tether’s bank account and they issue you with 100 Tether tokens which you can then use to buy cryptocurrencies as if they were real dollars.
People accept Tether in cryptocurrency trades because they know they can surrender the tokens to the Tether company and get US dollars transferred to their bank account.
Tether charge 0.1% fee for transacting too and from a bank account, which is how they make money.
This all sounds great but it relies on Tether having a minimum of 1 US dollar in its bank account for every Tether token in circulation.
Their inability to prove that, has been an ongoing controversy for more than a year.
Then news comes out that Friedman LLP, the accountancy firm that was supposed to be auditing Tether, decides to dissolve it’s working relationship with them, making the publication of any kind of audit even less likely.
Yet over 2b Tether tokens continue to circulate in the crypto economy. Why they haven’t all been redeemed for US dollars by now is beyond me.
What likely really spooked the markets is when Bloomberg published a story late yesterday about US regulators sending subpoenas to Tether in an attempt to forcibly verify that they are solvent.
While these subpoenas were issued on the 6th of December this is only making the headlines now.
While none of this alters the fundamentals of the cryptocurrency markets, the amateaur investors is easily spooked by any such news.
And one of the major appeals about cryptocurrency is that it allows anyone to take control of building their own wealth. So there are two sides to every coin.
So bottom line, I’m not doing anything in response to this news.
I don’t use Tether and have never touched it.
What I am in the process of doing is arranging an interview with
Rune Christensen, the creator of MakerDAO which has this price stable cryptocurrency called ‘Dai’ D.A.I. which maintains its value by being backed by Ether, rather than currency deposits at a centralised company.
Don’t ask me how it works, that’s why I’m having Rune on the show because this could offer the same benefits of Tether but in a decentralised way.
If you are looking forward to hearing Rune talk to us about the Dai then hit the like button and let me know.