If this goes on for a few more years, with broader investment from traditional investors (ETF), when Tether collapse I half-suspect that the cryptocurrency markets will bring the NYSE down with it in the fall as people sell to cover losses
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The last time Bitwise tried to list an ETF, they revealed to the SEC that 95% of all bitcoin trading volume was fake. If the SEC permits a real BTC ETF that would represent a serious failure on their part, IMO, and I agree the potential for Tether contagion would increase materially. [1]
[edit] this financial cancer can’t get excised quickly enough. The longer we wait the more will get hurt.
[1] https://cointelegraph.com/news/bitwise-tells-us-sec-that-95-...
Looks like a futures-based Bitcoin ETF may come in ~2 weeks : https://www.thinkadvisor.com/2021/10/04/the-first-u-s-bitcoi...
> The last time Bitwise tried to list an ETF, they revealed to the SEC that 95% of all bitcoin trading volume
95% of Bitcoin trading on *unregulated* exchanges was fraudulent. There’s a reason why people don’t use CoinMarketCap anymore and it’s precisely because it shows bad metrics from fraudulent exchanges.
They’re all unregulated. Coinbase was included in their list. The word “unregulated” was a flourish added by cointelegraph as a distraction.
> Of the 81 exchanges evaluated in the report, only 10 provide volume figures that are legitimate, according to Bitwise.
Coinbase is regulated as a money transmitter, like Venmo.
[edit] what I believe they meant was that 95% of all trading volume was fake and 100% of that came from the less reputable exchanges.
What does fake trading volume mean in this context?
Presumably wash trading that doesn't reflect any actual transaction. Or just straight up fake reporting of "off chain" trades that never happened by exchanges.
I don't know why people don't understand this. There was a twitter spaces a few weeks ago after one of these ETF delays where a bunch of bigwigs pushing these ETFs seemed clueless or willfully ignorant of this fact. Its just pathetic.
> I don't know why people don't understand this.
That old Upton Sinclair quote comes to mind: the finance guys are making a ton of money getting people to ante in and when you buy a cryptocurrency the only way you get your money back is by talking it up so anyone who's already in has a big incentive not to ask questions.
You massively overestimate 1) how much capital would flow into a bitcoin etf and 2) how large that would be relative to the rest of the US (or global) equity space.
Bitcoin has a trillion dollar “market cap”. That’s about 4% of the US equity market cap. In reality bitcoin’s market cap is nonsense, the real float is much smaller, and the real market is much much smaller.
$GBTC has $35B aum, and that is mostly due to the massive bull market in the last 18 months (thanks to Tether). The amount of hard cash that has flowed in is a small fraction of that, perhaps something like $7B (and since done 5x in performance).
But $GBTC is OTC and so not everyone can invest, and a vanilla ETF would likely garner more interest. How much more I don’t know. But $NKLA was a $30B fraud at its peak and yet in terms of market health, it was hardly a blip on the radar.
It's actually an interesting thought experiment to try to figure out what would (will?) happen when all this comes crashing down.
I am an extreme skeptic on all things crypto, I don't hold any and I think it's basically a gambling fad. But, with that said, I grudgingly recognize that it now has some powerful establishment interests behind it and things that have that tend to defy the laws of gravity, often forever. So I have no idea what will happen.
But it's interesting to contemplate scenarios. One obvious one might be that crypto values would be highly correlated to the values of specific stocks that are in favor by crypto enthusiasts (aka "meme stocks" or maybe Tesla, etc) and that if there's a full on crypto crash those specific stocks will be annihilated by margin calls, since it's the same set of retail investors.
That's one hypothesis, I'm sure there's many other interesting ones.
You have a pretty detailed account of what would happen by the Economist https://www.economist.com/finance-and-economics/2021/08/02/w...
The federal government should have shut down Tether years ago. At this point, Tether growing its tendrils into the real economy and becoming a systemic risk almost feels like an inevitability. Madoff 2.0, but even more obviously fraudulent.
That's always the game plan though. I wrote about it a few days ago: https://liuliu.me/eyes/the-endgame-for-cryptocurrency/
Once you have big enough following, having enough systematic risk, you, average scammers can enter "too big to fail" category, especially in democratic countries.
If USDT successfully turned half of the U.S. families holding 25% of cryptocurrency-related assets, they can work out any scamming issues they have in hand.