Blockchain Author David Gerard: Bitcoin’s Price is Rising Due to ‘Tether Manipulation, Not Organic Demand”


Bitcoin has skyrocketed over the past few weeks. Nobody really understands why bitcoin has gone up – there have been no major news stories corresponding with the rise. Blockchain author David Gerard, however, believes he has identified the cause: fraudulent minting of the controversial Tether (USDT) stablecoin.

David Gerard is best-known for his book, “Attack of the 50 Foot Blockchain”. The book explores the rise of bitcoin in 2017 – as well as the rise of ICO scams, the usefulness of smart contracts, and the power of crypto-based crowdfunding. It’s a comprehensive exploration of bitcoin and blockchain from the early days to the present.

Now, Gerard claims there’s an obvious reason why bitcoin has jumped 40% in the past week: the price is being manipulated with Tethers.

Gerard explored the issue in a blog post from this week, saying sarcastically:

“Number go up! This is totally organic market activity! People just like Bitcoin 40% more than they did last week!”

Gerard’s cheeky comment aside, the writer believes bitcoin’s recent rises and falls are being used to manipulate the BTC price and burn margin traders:

“[Bitcoin has risen 40% in the past week] because the price of Bitcoin is a proxy for margin trading — and rather than investing in the commodity itself, you can make more money by manipulating this thin and ill-regulated market to burn the margin traders.”

Gerard adds,

“This also allows the large holders — the “whales,” and the exchanges themselves — to cash out to whatever little actual-money US dollars are available, in a trading system where the liquidity is mostly fake dollars called “tethers.””

This price manipulation is also called a short squeeze.

Willy Woo recently had a great Twitter thread explaining how short squeezes work in crypto. Essentially, short squeezes and price rises like the one we’ve seen recently are part of a six-step process used to burn smaller traders.

How Whales and Exchanges Burn Smaller Traders with Bitcoin Price Manipulation

As stated by Woo and Gerard, here’s the six-step process bitcoin’s biggest holders – including crypto exchanges – use to manipulate markets and burn smaller traders:

Step 1) When the market is majority short, there’s too much money to be had to allow traders to win

Step 2) Whales (including exchanges) keep buying up the market until the shorts get liquidated

Step 3) At liquidation, the short seller has to buy back at the market price

Step 4) A tidal wave of buys cascade through the order books, causing a chain reaction and forcing the price to go vertical

Step 5) Whales get their payday; they bought low and now they can sell high, dumping their positions for maximum profit

Step 6) Prices come down to organic levels again as the blow-off is complete

If you believe Gerard and Woo, then we’re currently between steps 4 and 5: bitcoin has fluctuated between $7900 and $8300 over the past few days, well above its average price over the past year.

That means step six is next when bitcoin prices tumble down to organic levels – which likely means we’ll see prices back in the $5,000 range (or lower) in the near future.

$800 Million of Tethers Were Minted in the Last Month

Tether is allegedly being used to facilitate the price manipulation scam we mentioned above. As explained by Gerard, bitcoin has minted $800 million of Tethers in the last month alone. Each Tether (USDT) acts as $1 on the market.

Tether claims to only print new USDT tokens when it receives new USD cash. If you believe Tether, then that means the company has collected $800 million over the past month.

Alternatively, of course, there’s the possibility that Tether has not received $800 million over the past month, and they’re just printing money out of thin air to cover debts, manipulate prices, and ensure smaller traders get burned.

“It’s frankly implausible that someone spent $800 million of actual US dollars buying tethers in the past month, on the assumption that Tether constitutes a trustworthy financial institution.”

Tether, of course, is going through huge financial and legal difficulties. Last month, it was revealed that Tether was missing $850 million after using a blatant money laundering bank as its payment processor. The money, as Gerard explains,

“was either seized by the authorities or stolen by [the bank].”

This story emerged because Bitfinex admitted it to the New York Attorney General, which is suing Bitfinex for using Tether to cover its own business.

When Will Tether Collapse?

It seems like every day, we’re hearing more damning evidence against Tether and Bitfinex. The two closely-linked organizations have no transparency regarding crucial aspects of their operations. They have been repeatedly caught partnering with shady financial institutions. Tether seemingly gets printed out of thin air on a regular basis.

Despite all of this evidence, however, Tether continues to be the preferred stablecoin for some of the world’s largest exchanges.

Plus, Bitfinex continues to have strong trading volume – although there’s growing evidence that traders are fleeing the platform for better exchanges.

As shown by Bitfinex critic Bitfinex’ed on Twitter this past week,

“a scary amount of bitcoin is being withdrawn from Bitfinex”.

Of course, Bitfinex’ed and other Bitfinex critics also have a reputation for claiming the sky is falling, and that everything Bitfinex does is nefarious. So far, Bitfinex continues to operate smoothly – despite the fact that Bitfinex’ed has been claiming for well over a year that a shutdown is imminent.

It remains to be seen how the Tether and Bitfinex saga will end up. David Gerard’s blog post exploring the connection between Tether and bitcoin’s latest bull run, however, is certainly worth a read.

Bitcoin’s price is $45,640.68 BTC/USD exchange rate today. The real-time BTC market cap of $854.02 Billion currently ranks #1 with a chart dominance at 62.37%, daily trading volume of $26.08 Billion and live coin value change of BTC -3.88 in the last 24 hours.

Live Bitcoin (BTC) Price:

1 BTC/USD =$45,640.6808 change ~ -3.88%

Coin Market Cap

$854.02 Billion

24 Hour Volume

$26.08 Billion

24 Hour VWAP

$48.2 K

24 Hour Change

$-1,770.08

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