Analysts remain divided over how the news that crypto exchange Bitfinex and Tether Limited (USDT’s issuer) are currently in a precarious financial situation will affect Bitcoin (BTC). One analyst has remarked, however, that BTC moving lower off this news might not be bearish.
A Brief Recap
On Thursday, the New York Attorney General’s (NYAG) office published a press release, in which it was stated that Bitfinex and Tether were in violation of New York law through participation in activities that “may have defrauded” local cryptocurrency investors. Letitia James, the Attorney General herself, explained that the two firms may have “engaged in a cover-up” to hide the “apparent loss” of $850 million, which was a result of a payment processor, Crypto Capital, losing access to the funds (purported seizure by governments in Poland, Portugal, and the U.S.).
It was explained in a 23-page document that sometime in the past six months, Tether transferred $625 million to Bitfinex. And just recently, Bitfinex is reported to have returned the funds, but still has an iFinex shares-backed line of credit, which amounts to $700 million, open with Tether.
Bitcoin Holds At $5,200, Despite Bitfinex & Tether Fracas
As Ethereum World News has covered previously, after Thursday’s 10% sell-off from $5,550 to $4,950, the value of BTC has mostly stabilized around $5,200. Whether this is a result of the Bitfinex premium artificially inflating BTC, or investors coming to the conclusion that cryptocurrencies are in no immediate danger is unclear.
But the fact that Bitcoin has held strong is a positive sign, according to Placeholder’s Chris Burniske, the author of the leading book on the crypto asset class. In a recent Twitter thread on the matter, the investor, whose firm owns positions in BTC, Decred, ZCash, Maker, Ethereum, Filecoin, among others, explained that “hardly selling off after bad news” is something investors expect to see in a “bull market.”
Burniske did note that he doesn’t believe cryptocurrencies currently are in such a state, in spite of the “hurrahs around golden crosses,” but that this lack of negative price action does confirm that sentiment is overwhelmingly bullish. The fact of the matter is, Bitcoin rapidly recovering off this news is a likely sign that the market consists mostly of holders and accumulators, as made evident by the fact BTC’s chart structure “looks strong.”
Even if Bitcoin doesn’t continue to hold steady, and instead falls below $5,000, Burniske asserted that this won’t make him flip bearish. He wrote:
With $BTC needing to retrace to either $4K or the 200 week SMA to have a rock solid base for the bull market to come (IMO), we could get our last great opp of 2019.
For those not getting what Burniske is putting down, so to speak, he is noting that Bitcoin needs to establish a long-term support at $4,000, and that a move down to that level could be the “last great opportunity” to purchase BTC in 2019.
Title Image Courtesy of Chris Liverani Via Unsplash