Bitcoin Corrects Lower, Trouble to Tether Mounts
Bitcoin and altcoins rose during the past 2-3 days and moved into a positive zone. However, cryptocurrencies faced sellers on the topside and started a downside correction.
On the fundamental front, it seems like trouble is mounting on Tether. The company recently confirmed that their relationship with audit firm Friedman LLP has ended. In a statement, the company mentioned:
“We confirm that the relationship with Friedman is dissolved. Given the excruciatingly detailed procedures Friedman was undertaking for the relatively simple balance sheet of Tether, it became clear that an audit would be unattainable in a reasonable time frame.”
It all started with a post from an anonymous blogger, who raised concerns about USDT. There are rising alarms whether every USDT token indeed have a dollar sitting in bank accounts. The blogger Bitfinex’ed, summarized the post saying:
“Bitfinex will never submit to a third party audit, because they know what they will find. This could have also been a factor in their refusal to go through a traditional bankruptcy. The bankruptcy trustee would have found out Bitfinex could have been cooking the books since the day they started and the losses would have been way more significant.”
If all the ongoing drama continues, there are chances that bitcoin price could decline. USDT has a lot of weightage in trading cryptocurrencies. If something bad happens down the line, then altcoins could face a lot of selling pressure.
On the other hand, South African Revenue Service (Sars) said to be working in tax structure for bitcoins and digital currencies with their plans to examine cryptocurrencies space much more cautiously.
In addition, Bonnie Cheung, a venture partner at 500 Startups thinks that bitcoin is boring. While speaking to Bloomberg, Cheung compared bitcoin with a Motorola cell phone. She added:
“The three key areas are right now scalability if you look at throughput Visa does about on average 2,000 transactions per second. PayPal can do around 500, bitcoin it’s seven, ethereum maxing out at about 50.”
Clearly, she is referring to capacity and scalability problems of bitcoin. BTCUSD was down from the USD 12,200 high and is currently trading lower by 4.10% to USD 11,420.
Ethereum too suffered losses and was down by 2.65% to trade near USD 1,200. However, ETHUSD remains supported on the downside near the USD 1,180 and USD 1,160 support levels.
Bitcoin price is currently under pressure and there is a possibility of it testing the USD 11,100 support zone. Below USD 11,100, the price could break the USD 11,000 level for further declines. On the upside, there is a strong resistance near USD 12,000 and USD 12,100.
Other altcoins such as litecoin and ripple started a downside correction after an upside move. LTCUSD is currently down by 2.9% at USD 183.
Overall, the market is in a short-term correction mode. However, BTCUSD must stay above USD 11,100 to avoid further slides.