Quote from: spud21 on April 25, 2017, 12:16:26 PM

Is there a reason for the pump up to $1270+ besides the bitfinex withdrawals problems? The price has been quite stable lately, and this thread's been quiet. That's usually a sign of an impending big price movement.

Could Tether be the reason? https://np.reddit.com/r/Bitcoin/comments/6719bj/tether_announcement_about_their_banking_problems/dgn4yqt/

Quote

Good Morning.
I have been following and trading cryptocurrencies since 2013 and recently I have discovered something that worries me.
Some time ago, certain bitcoin exchanges (particularly Bitfenix and Poloniex) have started quoting their Cryptocurrencies in a unit known as "USDT" or Tether. This is not real fiat currency but a cryptocurrency supposedly backed 1:1 with US Dollars by a private corporation. Apparently Bitfenix has an ownership interest in this "tether" and back in late december the market cap of this USDT cryptocurrency has ballooned by about $50M.
This market cap expansion curiously started happening around the same time that the price rallies in Bitcoin, Litecoin, Ethereum and Dash kicked off. The way tether "works" is when a user wants to withdraw fiat to their conventional bank account they send their tether to the company and the company deposits real dollars into their bank account no questions asked. The legitimacy of their operations has been questioned in the past and over the past few days the market has started to discount the true value of USDT tether significantly; it is currently quoting around $0.925.
The problem here is that this is creating a very large price spread between exchanges that quote ACTUAL dollars and those that quote tether. This distinction is not being made clear, which I think is having an unhealthy influence on price rallies in cryptocurrencies. Furthermore, I have doubts that this tether is backed by dollars at all and in all likelihood is a fractional reserve.
The market caps of crypto currencies are misleading because a large number of coins are "parked" off exchanges and are not part of the real trading float. These markets are so small that $50M in counterfeit dollars can have a HUGE impact on the price.
I can also confirm from several traders that there has been significant interest in arbitrage trading between the exchanges only to discover that the tether currency cannot be withdrawn to the lower priced exchanges to support prices elsewhere. To me this smells a lot like the Mt. Gox situation back in 2013 when fake money was used to pump up the price of bitcoin using the "willy" trading bots. The arbitrage is attracting new deposits to these sketchy exchanges and the issuers of tether can literally buy cryptocurrency from unsuspecting sellers with funny money.
I personally think its going to result in bitcoin and other currencies "shooting to the moon" on the back of a devaluing tether and many ignorant traders on other exchanges are going to get caught with their pants down once this thing blows up.
If anyone finds this interesting enough to investigate further perhaps you can shed some additional light on the situation.