Ripple price started a decent upward move and broke the $0.2960 resistance against the US dollar.Both bitcoin and Ethereum recovered and gained more than 2.5%.There is a short term breakout pattern forming with resistance near $0.3085 on the hourly chart of the XRP/USD pair (data source from Kraken).The pair could continue higher and it is likely to test the $0.3175 and $0.3200 resistance levels.Ripple price starts a decent rebound against the US Dollar, along with bitcoin. XRP is currently trading with a positive bias and looks set to test the $0.3200 barrier.Ripple Price AnalysisAfter a major drop, ripple price formed a strong support above the $0.2850 level against the US Dollar. The XRP/USD pair slowly climbed above the $0.2880 and $0.2900 resistance levels. Later, there was a close above the $0.2920 resistance level and the 100 hourly simple moving average. Besides, the price cleared the 61.8% Fib retracement level of the drop from the $0.3082 high to $0.2798 low. It opened the doors for more gains and the price spiked above the $0.3080 level.A high was formed near the $0.3088 level and the price is currently consolidating gains. Furthermore, there is a short term breakout pattern forming with resistance near $0.3085 on the hourly chart of the XRP/USD pair. Below the triangle support, the 23.6% Fib retracement level of the recent wave from the $0.2836 low to $0.3088 high might act as a support. The next key support is near the $0.2960 level. The 50% Fib retracement level of the recent wave from the $0.2836 low to $0.3088 high is also near the $0.2960 level.On the upside, a break above the $0.3085 and $0.3100 levels is likely to open the doors for more gains. The next key resistance is near the $0.3160 and $0.3175 levels. Above these, the price is likely to grind further higher towards the $0.3200 resistance level.Looking at the chart, ripple price clearly climbed higher and it is currently consolidating gains above $0.3000. In the short term, there could be a downside correction towards $0.3000 or $0.2960. There is also a connecting bullish trend line in place with support near the $0.2960 level on the same chart. Therefore, dips remain well supported close to the $0.2960 level. To the topside, the main target for the bulls could be $0.3200 or even the $0.3220 pivot level.Technical IndicatorsHourly MACD – The MACD for XRP/USD is slowly moving back in the bearish zone.Hourly RSI (Relative Strength Index) – The RSI for XRP/USD is currently correcting lower towards the 60 and 55 levels.Major Support Levels – $0.3020, $0.3000 and $0.2960.Major Resistance Levels – $0.3085, $0.3160 and $0.3175.
Archives for April 2019
ETH price formed a support base near the $150 level and recently recovered higher against the US Dollar.The price climbed above the $155 and $158 resistance levels to move into a positive zone.There is a connecting bullish trend line forming with support near $158 on the hourly chart of ETH/USD (data feed via Kraken).The pair is currently trading with a positive bias and it could recover towards $165 and $170.Ethereum price started a decent rebound versus the US Dollar and bitcoin. ETH is now placed nicely above $158 and it may continue to rise towards the $170 resistance area.Ethereum Price AnalysisYesterday, there was a decent upward move in Ethereum price above the $154 and $155 resistances against the US Dollar. The ETH/USD pair even settled above the $155 level and the 100 hourly simple moving average. The pair gained bullish momentum and even broke the $158 resistance and the $159 swing high. It opened the doors for more gains above the $160 level and the 1.236 Fib extension level of the last drop from the $159 high to $150 swing low.The price traded towards the $165 level and formed a swing high near $163. At the moment, the price is correcting lower towards $160. An immediate support is near $160 and the 23.6% Fib retracement level of the recent wave from the $150 swing low to $163 high. Moreover, there is a connecting bullish trend line in place with support near $158 on the hourly chart of ETH/USD. If there is a break below the trend line, the price could test the $156 support level. The 50% Fib retracement level of the recent wave from the $150 swing low to $163 high is near the $156 level.Besides, the 100 hourly SMA is also close to the $156 support to prevent losses. On the upside, an initial resistance is near the $163 high. The next key resistance is near the $165 level, above which the price could start a strong wave towards the $170 and $172 levels.Looking at the chart, Ethereum price clearly recovered nicely above the $160 resistance level. In the short term, there might be a downside correction, but dips remain well supported on the downside near the $160, $158 and $156 levels. Overall, the price is likely to extend gains above the $163 swing high as long as it is trading above the $158 support level.ETH Technical IndicatorsHourly MACD – The MACD for ETH/USD is now placed nicely in the bullish zone.Hourly RSI – The RSI for ETH/USD jumped above the 60 level and is currently above 70.Major Support Level – $158Major Resistance Level – $165
At the start of April, Bitcoin rallied over $1,000 in the matter of an hour, giving crypto investors their first taste of bullish momentum since the start of 2019. The rally was enough to cause traders and analysts alike to call the bottom as “in” and claim that a new uptrend was confirmed.However, breaking news last week that the New York Attorney General’s office is accusing Bitfinex of using Tether reserves to hid a loss of $850 million has caused much panic across the crypto space. The same traders that were once calling for Bitcoin to test resistance at $6,000, are now also calling for a retest of resistance turned support at $4,200, back where the early April rally began. And according to a new poll, crypto investors are now equally split as to where Bitcoin might head next: $6,000 or $4,200.Poll Results Reveal That Bitcoin Traders Are Equally Split on Bitcoin Price TargetsRead any crypto community forum, group, or social channel and there is no shortage of crypto traders genuinely confused about the current price action, and which direction Bitcoin will go next.After the longest bear market on record, recent Bitcoin and crypto investors have taken a beating, and have been conditioned to anticipate a fall in price following a rally. The market sentiment is normal following a bubble burst, and confirms the market is in what’s called the “disbelief” phase.Related Reading | Bitcoin and Crypto Investors Are Torn Over Using Bitfinex After AccusationThe uncertainty surrounding Tether and Bitfinex, which could have have significant impact on the overall market integrity should the parent company of both becomes insolvent or is shut down the by New York AG’s office. The fears have stopped Bitcoin’s April rally in its tracks, and now crypto traders who were once bullish and calling for $6,000 are now suggesting that Bitcoin will need to retest resistance turned support at $4,200 before healthy upward movement can continue.While most of the market was bullish, the market is now equally divided as to where Bitcoin price will go next. The sentiment can be visualized using a Twitter poll shared by crypto trader Bagsy, who asked the crypto Twitter community which of the two prices would come first: $4,200 or $6,000.Which comes first for $BTC ?— Bagsy (@imBagsy) April 28, 2019Surprisingly, even with over 6,000 votes on the poll, respondents were equally split down the middle, with 50% voting on each option. With crypto traders so torn on price direction, one side of the argument is bound to be in for quite a shock when the price of the leading cryptocurrency goes counter to the direction of their choosing.Related Reading | Next Big Move For Bitcoin Price: Will The Infamous Golden Cross Fakeout Strike Again?The sentiment could also be viewed as positive, as prior to the recent Bitcoin rally, most bears were calling for sub-$3K prices as the Bitcoin bottom, but now even the most bearish of traders are warming up to the idea that the bear market has ended.Featured image from Shutterstock
Although Bitcoin incurred some downwards pressure late last week after news surrounding the Tether-Bitfinex imbroglio surfaced, BTC now been able to tepidly advance higher, and has led the entire crypto markets to surge.Despite finding stability in the lower-$5,000 region, analysts are now expressing somewhat cautiously bearish sentiments regarding the current state of BTC and expect altcoins to be the cryptos that incur further gains in the near future.Bitcoin (BTC) Advances Above $5,300At the time of writing, Bitcoin is trading up just under 2% at its current price of $5,330, up from 24-hour lows of $5,219.Earlier this week, news broke surrounding the New York Attorney General’s public accusation of fraudulent activity being conducted by stable coin Tether (USDT) and related crypto exchange Bitfinex, which instantly send BTC’s price reeling downwards from highs of $5,650 to lows of $5,180.Although the cryptocurrency’s recent price action certainly appears to be somewhat bullish, Mr. Anderson, a popular crypto analyst on Twitter, explained that in order for technical formations (like the recent golden cross) to be bullish, BTC’s price must actually respond bullishly.“$BTC Daily: The 55 EMA will cross the 200 EMA. This is inevitable. These events are not simply BULLISH though. It is the reaction by Price when this occurs that determines its effect (Bullish/Bearish) and that effect usually is long-standing,” he explained in a recent tweet.$BTC DailyThe 55 EMA will cross the 200 EMA. This is inevitableThese events are not simply BULLISH thoughIt is the reaction by Price when this occurs that determines its effect (Bullish/Bearish) and that effect usually is long-standing pic.twitter.com/8mPpYRECvU— Mr. Anderson (@TrueCrypto28) April 30, 2019Although BTC’s response to recently established bullish technical formations has been muted, it remains possible that the cryptocurrency is simply consolidating at the current time, and that a bullish surge is right around the corner.Crypto Markets Surge Despite BTC’s Stability Because Bitcoin has remained stable in the low-$5,000 region and it remains unclear as to which direction the crypto is heading next, many traders are turning to altcoins to make profits.Today, multiple major cryptocurrencies have posted decent gains, with XRP climbing over 5%, Bitcoin Cash surging over 6%, and Litecoin jumping over 8%.Lucid TA, another popular cryptocurrency analyst on Twitter, explained in a recent thread of tweets that he believes long positions on altcoins currently make more sense than long positions on Bitcoin, as many are currently bouncing off of long-established support levels.“Though $BTC looks questionable, I think longs make more sense on alts. Many are at support, and many reasonable trades can be found with high RR. Here are a few examples on different TF’s. There were better entries, though since I’m posting this late these are market entries,” he noted.Though $BTC looks questionable, I think longs make more sense on alts. Many are at support, and many reasonable trades can be found with high RR.Here are a few examples on different TF’s. There were better entries, though since I’m posting this late these are market entries. pic.twitter.com/IMZyHhPAKz— Lucid TA (@Lucid_TA) April 30, 2019Lucid further noted that he does believe Bitcoin is currently flashing some bullish signals.“A few further factors to consider. The fact that BTC swept the lows weakens the bear case and increases likelihood of a break up (‘bart’ pattern). Longs/shorts are bullish, though to be taken with a grain of salt…” he said.A few further factors to consider.The fact that BTC swept the lows weakens the bear case and increases likelihood of a break up (‘bart’ pattern).Longs/shorts are bullish, though to be taken with a grain of salt (for reasons mentioned in an earlier post). pic.twitter.com/0vOWs3pfm6— Lucid TA (@Lucid_TA) April 30, 2019As the week continues on and Bitcoin further establishes whether or not it has enough support around its current price levels to climb higher, it is likely that altcoins will be able to maintain their upwards momentum and continue climbing higher.Featured image from Shutterstock.
Research suggests that Bitcoin is more fully understood and accepted today across US society than it was at the height of the bull market of 2017. According to a recent study, young adults are way ahead of other demographics with regards awareness, familiarity, perception, and likelihood to buy Bitcoin in the future.Blockchain Capital recently asked 2,029 randomly selected American adults a series of questions relating to Bitcoin. The survey was a follow up to a similar one conducted in October 2017, when prices were rising and overall market sentiment was entirely different.US Public Becoming Increasingly Knowledgeable About BitcoinThe test was divided into various categories. First, the participants were asked if they had even heard of Bitcoin. A massive 89 percent answered that they had. This was up from 77 percent in October 2017. This is hardly surprising given that the spectacular crash of late 2017/early 2018 was covered by just about ever mainstream media outlet on the planet.Next, the participants’ familiarity with Bitcoin was gauged. They were given the question: How familiar are you with Bitcoin? along with a series of responses: “never heard of it”, “heard of but not familiar”, “somewhat familiar”, “very familiar”, and “I own/have owned Bitcoin”.The percentage of people that are “at least somewhat familiar” with Bitcoin rose by nearly half — from 30 percent in October 2017 to 43% in April 2019.Amongst those aged 18 to 34, 60 percent described themselves as at least ‘somewhat familiar’ with Bitcoin — up from 42 percent in October 2017. An equally large increase was observed in the age group 45-54. Previously, just 25 percent were at least familiar with Bitcoin. Now that figure is 43 percent.The percentages of those familiar with the cryptocurrency really diminish in older generations but still show an increase over those from 2017. Of those aged 55 to 64, 32 percent were at least familiar with it. This was up from 22 percent in 2017. Meanwhile, just 20 percent of those over 65 claimed to be knowledgeable about the decentralised payment tech, up from the 15 percent observed in the previous study.Next, the participants were asked how much they agreed that Bitcoin is a positive financial and technological innovation. Again, there was a significant increase in those answering favourably here too. In 2017, 34 percent of those asked agreed or strongly agreed with the statement. This rose by 9 percent in the recent survey to 43 percent.Younger respondents were much more likely to view Bitcoin positively. Of those aged between 18 and 34, a massive 59 percent said that they though Bitcoin was a positive innovation versus 48 percent in the previous survey.The figures relating to the likelihood that Bitcoin will be widely used in the future show similar tendencies too. A third of US adults now believe that the digital asset will be in common use in the next 10 years. This is a five percent increase to the figure observed in the previous study.Raising this overall average once again is the younger generation. A massive 48 percent of those aged between 18 and 34 agree that Bitcoin will be widely used within the next decade.The findings also indicate that 27 percent of people are considering buying Bitcoin in the next five years. Despite the bear market, this figure is up from just 19 percent in 2017.The write up of the report, summarised by Spencer Bogart, concludes by inquiring about people’s store-of-value preferences. The respondents were asked which asset they would like to own $1,000 of between Bitcoin and a traditional investment:Over one in five people said they would prefer the cryptocurrency to government bonds.Bitcoin was preferable to stocks for 17 percent of those asked.Fourteen percent of respondents would prefer Bitcoin to real estate.Just 12 percent said they would rather have digital gold over physical gold.Again, the figures for the youngest age group in the sample reflect a much greater acceptance of Bitcoin than the rest of the US public. Almost one in three prefers Bitcoin to government bonds, more than one in four prefers Bitcoin to stocks, just under one in four would rather own Bitcoin than real-estate, and over one in five would favour the crypto over gold.Younger Generations Championing Crypto RevolutionThe figures show that the younger generations are much more knowledgeable of, familiar with, and accepting of Bitcoin. This is summed up by Bogart himself when he states:“Ultimately, Bitcoin is a demographic mega-trend: Younger demographics are leading in terms of Bitcoin awareness, familiarity, perception, conviction, propensity to purchase, and ownership rates.”As a purely digital currency, it figures that the first to get to grips with the concept would be those that have grown up in a purely digital world. In that vein, crypto investment fund Adamant Capital’s CEO Michiel Lescrauwaet neatly summed up why digital cash might be alluring for millennials earlier today in response to the research detailed above:It makes sense that Millennials like Bitcoin most:1) found their way through 2008 crisis as young adults2) grew up with P2P (BitTorrent, Limewire)3) digitally native & familiar with open source (Linux, Wikipedia)5) first investments in zero interest rate environment https://t.co/bQQLmwFk0u— Michiel Lescrauwaet (@MLescrauwaet) April 30, 2019 Related Reading: Global Bitcoin Acceptance Up More than 702% Since 2013Featured Image from Shutterstock.
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- Following unconfirmed claims by the NYC Attorney General regarding Bitfinex and Tether’s insolvency, the bitcoin market had a knee jerk reaction that caused us to retest macro support. However, this pullback barely made a scratch on the market structure as we didn’t manage to break our trend of higher lows.
- The move was swift, but after a few days of sideways consolidation, the market is now seeing a retest of macro resistance in the $5,300 level. So far, the market has yet to reclaim the broken support, but the move is still fresh
- If we manage to close above the $5,300 level, this would mark a very bullish feat for our market structure as we continue to test and reclaim support level after support level. If we can close a daily candle above the $5,300 level, it’s very likely we will see a continuation of the uptrend and test the $5,800s.
- At the moment, the short interest is very high and the market seems to be absorbing every bit of ammunition the bears throw at it. As time moves on, we are seeing a high amount of short positions stack up around the $5,300 zone. This sets up the market for a potentially violent short squeeze.
Trading and investing in digital assets like bitcoin is highly speculative and comes with many risks. This analysis is for informational purposes and should not be considered investment advice. Statements and financial information on Bitcoin Magazine and BTC Inc sites do not necessarily reflect the opinion of BTC Inc and should not be construed as an endorsement or recommendation to buy, sell or hold. Past performance is not necessarily indicative of future results.
Bitfinex and Tether’s legal counsel has written a response to the New York Attorney General’s (NYAG) ex parte order, which claims that Bitifinex used Tether’s reserves to cover some $850 million in losses.
In short, the affidavit writes off the NYAG’s concerns, calling them baseless and requesting an Order to Show Cause that would require the NYAG to prove its case in court unless it vacates or modifies the ex parte order. Additionally, it requests that the Supreme Court of the State of New York stay the NYAG’s order, meaning Bitfinex would not have to comply with a May 3, 2019, deadline requiring the exchange to produce documents related to a $900 million line of credit Bitfinex established with Tether to stanch the $850 million loss.
Authored by Stuart Hoegner, who has served as Bitfinex and Tether’s legal counsel since 2016, the affidavit is scathing in its rebuke of the Attorney General’s claims. Hoegner writes that the Office of the New York Attorney General’s (OAG) “preliminary injunction serves no useful purpose” and that it “has succeeded only in spreading misinformation to the markets.”
Marked throughout with a tone of defiance, the letter asserts that “Tether holders are not at risk,” despite the NYAG’s framing of the situation in its own letter. Further, it claims that Bitfinex self-reported its troubles with Crypto Capital to the NYAG, the payment processor that allegedly led to Bitfinex’s $850 million loss of customer funds.
Hoegner admits that Tether is operating under a roughly 74 percent reserve — but also argues that this practice is not a problem.
The AG Doth Protest Too Much?
The affidavit begins in defense of Bitfinex’s relationship to Crypto Capital, whose refusal to wire funds to Bitfinex back in 2018 bottlenecked fiat withdrawals for many customers, the NYAG’s letter states.
Bitfinex had to rely on Crypto Capital’s services because it had been ostracized from proper banking relationships, Hoegner claims, citing how its complications with such banks as Wells Fargo is a perpetual thorn in the industry’s side.
According to the letter, Bitfinex, among other exchanges (like QuadrigaCX in Canada) that used Crypto Capital for makeshift banking, began experiencing withdrawal problems in 2018. This was on account of Crypto Capital having a substantial amount of its funds seized, the document states, affirming that “at least one governmental entity has confirmed that it was involved in the seizure of Crypto Capital funds.”
What’s more, the document alleges that “Bitfinex proactively and voluntarily informed the Office of the New York Attorney General (‘OAG’), as well as various U.S. federal law enforcement agencies of its issues and concomitant concerns with Crypto Capital.”
The letter continues, “On information and belief, those federal agencies have since been investigating Crypto Capital on a non-public basis at the time of OAG’s application and press release regarding this matter.”
Hoegner continues to make the case that Bitfinex orchestrated a “good-faith solution” when it debited $625 million from Tether’s reserves, along with establishing a $900 million line of revolving credit with the stablecoin company, to cover the losses incurred from Crypto Capital.
The counsel argues that this was done “for the protection of the virtual currency market,” and he suggests that the NYAG’s recommendation for the New York Supreme Court to enjoin Bitfinex from drawing on this line of credit would harm the market’s participants.
“OAG purports to wonder what ‘benefit[s] would accrue to Tether, or holders of tethers, from this transaction,’ the obvious answer is that Tether, and holders of tether, have a keen interest in ensuring that one of the dominant trading platforms of tethers has sufficient liquidity for normal operations.”
Biftinex’s upper echelon began orchestrating the deal in December of 2018, and according to the document, Bitfinex alerted the NYAG to the deal “one month before it was closed, providing OAG a general overview of [it].” The NYAG makes mention of this in its own letter, but it qualifies that it wasn’t alerted of the deal’s final structure until after it was finalized and that it had changed from its first draft.
“The description of the transaction differed significantly from what OAG was told just weeks earlier in the February 21. 2019 meeting. and included new information about a previous. undisclosed transfer of $625 million from Tether’s reserves to Bitfinex,” the ex parte order reads.
Hoegner makes no reference to the $625 million Tether transferred to Bitfinex’s Bahama-based Deltec bank account; it only touches on $675 million that was transferred from Bitifinex’s Crypto Capital account to Tether’s Crypto Capital account for “the protection of Tether.”
This transaction, which the document claims took place on an “arms-length basis” was signed for both sides by the same representative counsel, Giancarlo Devasini.
Under the Tether
The letter continues to say that the deal has not interfered with Tether’s usual business dealings as the NYAG’s letter might suggest, adding that “the average daily fiat redemption has been $566,066.00, with the largest being $24.2 million.”
This is drawn from a reserve of “cash or cash equivalents (short term equivalents)” of $2.1 billion. With its market cap at $2.8 billion, that means Tether is running at a 74 percent reserve, Hoegner admits, going further to say that Bitfinex can draw on the line of credit until this percentile drops to 68.
With a deposit-to-reserve ratio of 3 to 4, Bitfinex is doing leagues better than banks that are legally obligated to only hold fractions of reserves at or lower than 10 percent, the document points out. That Tether is operating with fractions in its reserves has also been well covered by industry media, Hoegner argues, when Tether made changes to its website’s policies.
“Market participants appear to understand that tether is not at risk,” Hoegner concludes. Turning the tables, the lawyer argues that the NYAG’s “misleading” letter did more damage as the market shed some $10 billion in capitalization in response, and he argues that “market confidence in U.S. Dollar tether remained strong, as tether continued to trade at $0.99” — this is after USDT dipped to $0.97 following the news.
In a memorandum defending Hoegner’s stance, Zoe Phillips, an attorney for Tether, argues that the NYAG has no business meddling in Bitfinex and Tether’s affairs as long as there is responsible disclosure.
“… the Attorney General has no authority to dictate how Bitfinex and Tether do business with one another, or the amount of reserves that Tether must hold. The Martin Act is an antifraud statute enacted to ensure that there is proper disclosure about the risks associated with the sale of securities and commodities … Tether states plainly on its website that tethers are backed by reserves in various forms, specifically including ‘loans’ to ‘affiliated entities.’”
For its own part, one of the NYAG’s qualms with the line-of-credit arrangement is that Tether holders and Bitfinex users were not informed.
Still, Hoegner’s letter draws the same conclusion that the “OAG’s application contains numerous mischaracterizations and omissions that undercut its request for injunctive relief.” It gives no indication that Bitfinex will comply with the NYAG’s demand to comply with a series of requests by May 3, 2019, arguing that it would “impede the normal operations of Bitfinex’s business.”
Over the past several months many cryptocurrencies have incurred relatively large gains that have put a significant amount of distance between their current prices and their 2018 lows. But much to the chagrin of investors, Ripple (XRP) has not been one of these cryptos, as it has remained relatively stable around the $0.30 region.Today, however, Ripple has gained some upwards momentum after news broke regarding XRP’s Liquidity Index being added to the Nasdaq Global Index Data Service, joining Bitcoin and Ethereum, which were both added previously.Ripple (XRP) Sees Growing Adoption Despite Lackluster Price ActionAlthough many investors directly equate positive price action with growing fundamental strength, the two are not inextricably linked, as often times cryptocurrencies incur massive price movements – both upwards and downwards – regardless of fundamental, news-based developments.XRP, whose future largely hinges on whether or not banks begin taking to it to facilitate payments, has been floating slightly above its 2018 lows that were set in the mid-$0.20 region in late-December, and many investors are beginning to lose faith in it as it continues to face downwards pressure despite the improving market conditions.Despite this, in the past week the embattled cryptocurrency has incurred a few positive developments that may ultimately help it climb out of its rut.Today it was announced that Nasdaq would be adding Brave New Coin’s XRP Liquidity Index to its Global Index Data Service, which was developed by BNC with a goal of meeting the “marketplace requirement for a single, reliable and fair USD price for XRP — based on live real-world trading activity.”In addition to this, it was also recently announced that Saudi British Bank (SAAB) – which is a subsidiary of banking giant HSBC – has officially launched its first Ripple-based payment system, although it remains unclear as to whether or not they will be utilizing xCurrent or the XRP-based xRapid.Majed Najm, SAAB’s deputy managing director or corporate and institutional banking, spoke about their decision to use a Ripple-based payment system, saying:“This step is part of the Bank’s ongoing efforts to provide the best banking services to customers, make use of the latest technology and global banking products available, and create methods and means to save time and effort for our customers.”Could Growing Adoption Push XRP Higher? At the time of writing, XRP is trading up 4.2% at its current price of $0.306, up from its daily lows of $0.29.Over a one-month period, however, XRP is still down significantly from its highs of $0.37 that were set earlier this month.This recent price surge may be technically significant for XRP, as it recently hit a price level below $0.30 that many analysts deemed to be a “do or die” price level for the cryptocurrency.Peter Brandt, a popular analyst on Twitter, explained this in a recent tweet, saying its “do or die time for the $XRP bag holders.”Do or die time for the $XRP bag holders pic.twitter.com/ZrRtHtBDCY— Peter Brandt (@PeterLBrandt) April 27, 2019As the week continues on and XRP’s price action continues to unfold, it will likely grow increasingly clear as to whether or not growing fundamental strength will be enough to hold it above $0.30 and to propel it higher.Featured image from Shutterstock.
According to the company behind it, stablecoin USDT is not fully backed by fiat currency deposits. It was revealed today that the controversial crypto asset firm Tether only holds around 74 percent of the total value of USDT’s current circulating supply.Tether and the crypto exchange Bitfinex are currently defending allegations from the New York Attorney General’s office that the latter borrowed $600 million from Tether to stay afloat after the trading venue reportedly lost $850 million. The dramatic shortcomings are thought to be the result of Crypto Capital, a Panama-based payments processor that Bitfinex used, having assets frozen in various nations around the world.USDT Not Backed 100%, But Did Anyone Think That it Was?An affidavit filed by Stuart Hoeger, the general counsel at both Tether and Bitfinex, has today claimed that the stablecoin crypto asset USDT is only backed by around $2.1 billion. This falls short of the $2.8 billion worth of USDT currently in circulation. The document states:“As of the date [April 30] I am signing this affidavit, Tether has cash and cash equivalents (short term securities) on hand totaling approximately $2.1 billion, representing approximately 74 percent of the current outstanding tethers.”He also details that a credit agreement between Tether and Bitfinex did indeed exist and was in place “for the protection of the virtual currency market.”According to a memorandum by Tether’s defence lawyer, Zoe Phillip of Morgan Lewis, there is no need for each USDT token to even be backed by a dollar:“According to the Attorney General, the line of credit needed to be frozen because it improperly impairs the reserves Tether would use for redemptions. The Attorney General appears to believe that Tether must hold $1 in cash fiat currency for every dollar of tether. These allegations are wrong on multiple levels.”Hoegner’s affidavit seems to support this by highlighting that the stance of the company had officially changed with regards the 100 percent backing of USDT in recent months. Given that this was widely reported at the time, it seems a wonder firstly that anyone was even continuing to use USDT when numerous other stablecoins now exist and secondly, why the news of the New York Attorney General’s allegations against the two companies should drop the price in the way it did last week.Crypto Community Reacts to Tether and Bitfinex Legal TroublesThe CEO of social trading platform eToro, Yoni Assia, took to Twitter to opine about the revelation’s likely impact on crypto prices. He mused on the likelihood of a potential Bitcoin price pump if the news causes people exit USDT en masse. Ultimately, however, he admits that the shady goings on between Tether and Bitfinex will be negative for crypto. Although, he is sparse on specific details.Are the news supposed to pump or dump BTC ? Its bad news, but if $2B USDT get exchanged to BTC it actually increases its price… what a predicament .
Tether Lawyer Admits Stablecoin Now 74% Backed by Cash and Equivalents https://t.co/f9Rw75FNCO via @CoinDesk— Yoni Assia (@yoniassia) April 30, 2019Meanwhile, independent crypto researcher and analyst Hasu seemed to hint that the debacle would inevitably invite greater regulatory scrutiny to exchanges, which could in turn damage the utility of Bitcoin and other crypto assets:I’m not surprised that bitcoiners have a soft spot for Tether/BFX.Lightly-regulated fiat on/off ramps are part of bitcoin’s extended security model. Bitcoin is less useful when every way in and out is US-regulated. They accept that this increases the risk of getting cheated. https://t.co/kPdNK9N0A1— Hasu (@hasufl) April 30, 2019Cardano (ADA) founder and Ethereum (ETH) co-founder Charles Hoskinson used the news to draw attention to the fact that banks routinely operate on far lower reserves than those admitted by Tether today. This sentiment was also echoed by RT’s Max Keiser and many others.Well at least tether has more backing than my bank account https://t.co/Tm6ZgBiXZF— Charles Hoskinson (@IOHK_Charles) April 30, 2019Tether is 74% backed.Fed is 1% backed.JP Morgan is -20% (un)backed.— Max Keiser, tweet poet. (@maxkeiser) April 30, 2019Ultimately, such a comparison is largely redundant, however, as any form of fractional reserve backing USDT the anti-thesis of what many people in crypto signed up for when they got involved with the industry. Larry Cermak, an analyst with The Block, stated that comparisons between the percentage reserves held by Tether and those of the average bank ultimately ignore the shady goings on of the crypto exchange Bitfinex. He went as far as to state that both companies are guilty of pathological lies:So all of the sudden it’s fine that Tether only has 74% of cash on hand because banks are even worse? And it’s fine that Tether as well as Bitfinex pathologically lie about anything they can get away with? pic.twitter.com/y8jVU21HSw— Larry Cermak (@lawmaster) April 30, 2019The Tether/Bitfinex saga is far from over yet. NewsBTC will continue to bring you coverage of the legal hearings as they develop. Related Reading: Technical Indicator Suggests Tether Trouble Has Put an End to Bitcoin RallyFeatured Image from Shutterstock.
Federal tax season just passed in the United States, but if you’re one to leave responsibility to the wayside and had to apply for an extension, that might just pay off.
It’ll give you the opportunity to become one of the inaugural users of a new joint-endeavor by crypto payment processor BitPay and tax services company Refundo. The new program called CoinRT gives Refundo users the opportunity to take their federal and state income tax refunds in bitcoin.
“We believe that as more and more people understand the benefits of Bitcoin, they’ll gravitate to it. With the option to set aside all or part of their refund in a seamless manner, it allows those on the sidelines to jump right in,” Refundo CEO Roger Chinchilla told Bitcoin Magazine.
Tax filers using Refundo’s system who opt into the program will include a routing and account number linked to BitPay’s Payouts. Once the refund hits this account, BitPay converts the cash to sats and sends it to whatever wallet address the user provided upon sign-up (this sign-up, as one would expect, includes KYC).
A press release shared with Bitcoin Magazine highlights that the move is in line with Refundo’s wider focus on lower income and poorly banked populations. For this purpose, bitcoin offers a low friction refund option for those who don’t have access to reliable banking, Refundo CEO Roger Chinchilla claims.
“We’re always looking at low-cost and convenient methods to disburse our clients’ refunds. As bitcoin adoption steadily grows, Refundo believes we can serve as an innovative payout process for our clients. Refundo’s focus has been on serving the underbanked, which is at the core of bitcoin’s rise, so it’s a natural fit. More than that, it gives taxpayers an incentive to save. Instead of splurging when your refund arrives (this is typically the case in low-income communities), CoinRT can act as a saving mechanism and ensure taxpayers are more fiscally responsible,” he told Bitcoin Magazine.
Head of Business Solutions at BitPay Rolf Haag told us that the partnership answers “customer demand in multiple verticals for Bitcoin Payouts. It also signals that the “global marketplace” for payouts in bitcoin is growing.
“Recipients want choice, especially for high cost alternatives like bank wire receipts or pre-loaded debit cards. Recipients are tired of paying to receive, and senders want to make their recipients happier without incurring additional costs,” he concluded.
At any rate, the partnership adds bulk to a growing trend of bitcoin’s burgeoning role in taxation. Canadian town Innisfil made history early this year as the first North American municipality to permit its citizens to pay local taxes in bitcoin. For Canada’s southern neighbor, Ohio opened up a bitcoin payment option to its corporations at the tail end 2018, and, in May of the same year, Seminole County Florida enabled the option for things like property tax.