CRYPTO MOVERS AND PRICES
Crypto is marginally higher this morning after a weekend that saw bitcoin again consolidate below USD 10,000. Spot volumes are shrinking quickly with activity only about ~50% of a declining 30-day average.
CRYPTO STORY OF THE DAY
Tether market cap surpassed USD 9 billion for the first time solidifying its standing as the 3rd largest crypto by that metric. The move comes in tandem with the recovery of the general Bitfinex/Tether business, which had tough times in 2018-2019.
Bitfinex and Tether, for reasons that remain largely unknown, have a history of being attacked by anonymous third parties making claims that would later be found to be unsubstantiated. Most famously the anonymous writer Bitfinex'ed made a series of Medium posts throughout 2017/2018 along with a Twitter account where they alleged everything from the exchange being a Ponzi scheme to wash trading.
None of the claims were ultimately substantiated. The writer hasn’t written a medium post since 2018 and has become far less prolific on Twitter. At the end of 2018, the exchange did see legitimate banking issues where extremely long fiat withdrawal times threatened the future of the venue. As a result, platform users began to bid up crypto prices on the exchange as crypto withdrawals were still proceeding normally. That led to the infamous, “Bitfinex spread” which saw BFX crypto prices trade over a 1% premium to those on other major exchanges for months. The rest of 2019 remained difficult with the New York Attorney General launching their infamous lawsuit against the company in the early summer 2019 and finally, a U.S.-based law firm launched a lawsuit against the company later in 2019 citing a trillion dollars in damages (a suit we've described as frivolous).
Tether saw market cap contraction in the first half of 2019 but finally turned the corner and thrived following the ~$1B LEO Token offering and general quieting around the NYAG lawsuit. As the Bitfinex spread shrunk, Tether made new market cap highs in the back-half of last year before accelerating in 2020.
Bitfinex/Tether are by no means completely out of the woods. The New York AG lawsuit remains outstanding and the company still doesn’t have access to USD 85 million in customer funds as a result of their involvement with payment processor Crypto Capital (those funds now backed by LEO token). However, major functionality issues around fiat banking experienced in late 2018/early 2019 have been largely resolved. As a result, investors continue to favor the platforms and Tether remains a cornerstone of crypto, generally being the major settlement currency of crypto/crypto platforms such as Binance and others like OKEx and Huobi.