By CCN: After New York alleged that industry giant Bitfinex had potentially committed fraud with its handling of the Tether cryptocurrency, one might have expected Bitcoin traders to initiate a mad rush for the exit.
Shockingly, however, this black swan event barely caused a ripple in the global markets, proving that Bitcoin investors just don’t give a f**k.
Last week, the Office of the Attorney General (OAG) of New York published legal documents alleging that $850 million of Bitfinex reserves had been compromised and that the crypto exchange used Tether funds to conceal the loss.
An outsider would have expected this negative news to shake the market to its core, and it initially did – but only for a moment.
The bitcoin price quickly dropped 8% to the low $5,100s, only to rebound back to its original price and – against all odds – continue to pound higher. On Bitfinex, bitcoin rose as high as $6,196, though this was partly because Tether now trades at a slight discount to its supposed $1.00 peg.
Why has the investigation so far had minimal impact on the price of bitcoin? Seriously. One of the most powerful legal authorities in America launched an investigation into a company that many believed presented a systemic risk to the entire crypto economy – and the market barely yawned.
Having survived a correction of over 80 percent, the crypto community was hardly disturbed by the OAG investigation. Even after Tether’s admission that approximately 74% of their crypto tokens are backed by the dollar, bitcoin still roared on.
To many traders, this latest news was just more Tether FUD – the kind which the markets have so regularly experienced, dissected, and moved on from. Why should this be any different?
Another important consideration is the possibility that Tether’s woes might have been priced in as far back as Nov. 2018 when the bitcoin price collapsed from $6,000 to nearly $3,000, losing over half its value in short order. Cryptocurrency insiders privy to the investigation might have even triggered that sell-off.
Given the shadowy backroom politics and manipulation present in the cryptocurrency space, this theory can’t be discounted out of hand.
Negative news frequently disrupts the cryptocurrency markets, but experienced traders have been through it all and will stick to their irreducible minimums when it comes to maintaining their bitcoin price targets.
That said, the same traders could very well be ignorant of the gravity of the situation and merely be setting themselves up for a panic-driven collapse in the future.
Last modified (UTC): May 6, 2019 14:31