I have a personal conspiracy that Bitfinex has been pumping BTC by printing unbacked Tethers (they have the same CEO) then just buying up everything themselves on Bitfinex and creating fake volume. BTC price goes up and all other exchanges adopt that price. Next Bitfinex sends the crypto they bought to the other exchanges and swap it for real money. Rinse and repeat. As soon as people realize that Bitfinex is insolvent and Tether is basically worthless the whole thing will implode.<p>My theory is that Bitfinex is basically broke. They've been hacked numerous times, and their bank account was frozen. Their choices were to either admit that and freeze users' funds or fake their way out. Since the CEO of Bitfinex also controls Tether he decided to switch everyone's account from USD to Tether. Next he needed to attract capital, so he decided to pump up the price of bitcoin higher than other exchanges to make people send bitcoin to Bitfinex. That has become a loop and every time they print more Tether they send it to Bitfinex and pump up the price. What is their end game? I'm guessing an island with no extradition treaty. They are trading their tether for crypto and the crypto for real money but nobody knows where that money is going.<p>It will probably turn out the exchanges were running a fractional reserve and they don't have enough crypto - and if usdt is also no longer redeemable everyone on the exchange would basically lose everything.<p>I only own $2k in BTC & ETH, but I believe you are right in identifying tether as a cryptocaust waiting to happen. People have been shorting since 2017 or so, so I wonder what sort of external event will push everything over the edge.
My biggest concern is the fact that "exchanges" are completely unregulated.<p>Crypto fans operate under the assumption that these marketmakers are stable, honest and trustworthy --- like the <i>regulated</i> stock and currency markets. This is not assured in any way --- and neither is the assumption that Tether is backed by dollars.<p>Tether is just one example of how "exchanges" can easily manipulate the market and traders they pretend to serve.