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.
Bitcoin Barely Hiccups After New York Unleashes Bitfinex Bombshell
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.
Note the sharp drop in price on Apr 26 when news about the NYAG allegations had permeated into the market | Source: TradingView
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.
Scandal? What scandal? Bitcoin, after a slight blip, proceeded to power to new yearly highs | Source: TradingView
Crypto Traders Have Grown Immune to Tether FUD
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?
Fear inducing headline:
“Only 74% of #Tether is backed by cash and equivalents?”
The truth:
Your bank would collapse if everyone tried to withdraw, they have nowhere near 74% liquidity.
Calm down people. Buy Bitcoin.
— Bitcoin Birch ?? (@BitcoinBirch) April 30, 2019
Crypto Market May Have Already Priced in Tether FUD
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.
When you hear the tether fud was priced in they are right. Insiders most likely knew late october early november of the events discussed and the price crashed 50%+ to $3k….
— OhHeyMatty (@ItsMeOhHeyMatty) April 26, 2019
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.