Bitcoin topped $30,000 today, between 16:29 and 16:47 UTC! And I’m getting calls about it. Number go up!
As usual, this signifies very little. No more than it does when the price goes down.
The number did not go up because of Wall Street interest, futile ETF filings, regulator signals, interest rates, the global economy or sunspots. It went up because of internal market shenanigans. It’s always shenanigans.
Crypto is presently screwed
The crypto trading market is in the dumps. The retail dollars have gone home. Cashing out at scale is proving difficult.
The crypto exchanges and trading firms have large piles of cryptos which they account at mark-to-market — if you have 10,000 BTC at $30,000, just account it as $300 million!
Trouble is, there aren’t three hundred million dollars out there looking for bitcoins to buy. The realisable value is much lower.
So everyone has a great big mark-to-market time bomb in their accounts — as they all pretend they’re not broke.
(This isn’t even getting into exchanges that count their own supermarket loyalty card points as money — as FTX/Alameda did with 5 billion “dollars” of its own FTT tokens, and as Binance does with its own BNB tokens.)
If you’re playing pretend with your accounting, you need the number your accounts depend on to stay up. If it’s cheaper to pump the number up than to let your accounts go down, you pump the number up. And it is indeed cheap — the market’s really thin right now!
Prime directive
Binance has lost BUSD — no more will be minted — and it doesn’t seem so keen on tethers. So Binance’s stablecoin of choice is now TrueUSD, or TUSD, which totally isn’t run by Justin Sun of Tron, allegedly.
Binance was caught printing BUSD out of nowhere on its internal BNB Smart Chain – which is probably what led to Paxos being told to close BUSD.
TUSD was, until recently, minted at Prime Trust. It isn’t any more. Prime Trust, which Binance US used to use as a trustee, has hit financial trouble (because the crypto economy is running out of dollars). Prime has agreed in principle to be bought by BitGo. [CoinDesk]
TUSD lost its peg earlier this month at the news. [u.today]
TUSD has had to pause the automated attestations of its backing — the page that shows that every TUSD in circulation really is backed by some sort of assets. As it happens, the page updates can be stopped “due to an actual imbalance of liabilities and corresponding assets.” Coincidentally, billions of TUSD have been minted recently. [Protos]
What could you make the price of bitcoin do if you could just print a few billion fake dollars to move it with?
None more organic
Remember that the crypto trading economy is Binance and some stragglers. Binance is under no effective regulation — so nobody can stop them from doing anything they like that doesn’t scare off the suckers.
It is of course just allegations that Binance engages in market manipulation, wash trading and trading against its own customers. Allegations that made it into the SEC complaint against Binance US, and the Washington Post last year. And remember that CZ from Binance confessed that wash trading was standard at OKCoin when he was working there in 2015. [Washington Post, 2022; Reddit, archive, 2015]
There’s also how the BTC-USDT price on Binance US momentarily spiked to $138,070 around 03:00 UTC this morning:
From OperationAjax on Twitter
But is there hope for crypto?
If the SEC wins its very solid cases, Coinbase is utterly screwed and Binance loses the US market.
Coinbase is hoping that Rep. Patrick McHenry’s new crypto markets bill nullifies the SEC suit and lets them keep their business open. Really, that’s what Coinbase has for a plan. [Bloomberg]
I am disconcerted to hear there’s a greater than zero chance of McHenry’s bill going through. This is quite bad, because it would allow through all manner of bad and awful financial instruments and shenanigans that are presently illegal for excellent reason — if you tack on a gratuitous blockchain.
But I don’t think even this bill will save crypto in the short to medium. Cryptocurrency is still perceived as awful trash for crooks and idiots. Coinbase is still haemorrhaging money.
A bubble won’t come back for at least a few years, and then only if sufficient suckers grow back. If regulators mess up this time around, then perhaps crypto can bubble again!
In the short term: if you have a big bag of dead cryptos you can’t shift, this is the moment to turn them back into cash while you can. Coinbase still has US dollar banking. For now.
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As always, well said and brutally direct.
These reminders of shenanigans are always necessary. It is, however, interesting to speculate on the motivations behind the current shenanigans beyond the simple “we need the balance sheet to look better”. There are persistent rumours that some spikes happen to wipe out short positions. The current Bitcoin spike is much bigger than required for that, and may represent actual flight from TUSD.
Not two days after the article, events have overtaken it: Nevada regulators forced Prime Trust to suspend operations. https://protos.com/tusd-says-everythings-fine-its-not/
TUSD announced clients can’t mint now. Wait… didn’t they say they weren’t using Prime Trust anymore? Must be a coincidence.
oh absolutely, all of this goes on at once. There’s also rumours that Binance has been kicked out of the exchange chat (the one that SBF talked about in his written testimony to Congress). Meanwhile, right now I’m finishing up SEC v. Binance part 3 at last …