I love crypto, I think the technology is amazing. Satoshi, has given the World a brilliant gift blockchains. But due to human greed, over promises, the market popped. Failed ICOs, over priced technology that didn't exist. We all followed and believed then got greedy.
We already know what a Bubble feels like and now fast forward almost 1 year, we have now experienced, what a bear market is.
Us amateurs have been able to become professionals, through first hand experience.
We also collectively know of the strong fundamentals that have been building. I.e Nasdaq backed exchange, OTC counters with Billions of daily volume, and eventually a ETF. From University Funds now entering publicly, and technology actually maturing . The fundamentals are bullish.
But there are some nay-Sayers. Such as Nouriel Roubini, but personally I think he was not taken seriously by the Senate Committee - By their tact and questioning, they saw through the rant of his little understanding. And were more interested in the benefits and its technology.
But like Bitfinnex'ed on twitter, they do have a point about Tether.
We all know about the supposed Tether Bomb- how do we react with the accompanying FUD, rumours and vague responses by Bitfinex. It may be them bank hopping, and finding it difficult for them to service fiat, but with no clear audit, we can see some weaknesses. Unlike that of newer stable coins, which are finding this easy to achieve.
We also know that USDT premium has grown for over a week or so. Here are my personal recordings of highest difference per day:
03.10.2018 -$43.97
04.10.2018 -$56.54
05.10.2018 -$58.78
10.10.2018 -$91
14.10.2018 -$147.11
Currently as of 8:22pm UK Time it is now $164.85
Bitfinex's Cold wallet is still decreasing. https://bitinfocharts.com/bitcoin/wallet/Bitfinex-coldwallet
Just under 27,000 BTC since 1st October 2018. That is $168 million in two weeks. -16.38% drop in their BTC wallets.
I even looked at previous months. And up until September 7th, the wallet count was increasing - reaching a maximum amount of 226,204 BTC. But since then, there has been 88,500 BTC removed. Which would be a 39.12% drop in only 2 Months.
As wise investors, we would not overlook such red flags and we should have an accompanying strategy to deal with this.
So what could we do?
One idea is actually shorting USDT. Risk wise, at current prices 1 USDT to $0.975. About 2.5% Loss if the bet went wrong. As it is capped by its "peg".
I.e for every $1000, the loss is $25, if Tether does come out with official banking or legitimate industry standard audit.
But if Tether does turn out not to have banking and trust capitulates. Tether could crash into double figures. And from a premium currently being created, it will distort crypto-currency prices. Causing confusion and likely causing price panic. Compare Coinbase to Binance and you will see there is already a $150 between BTC prices.
But the fundamentals apart from this issue are very strong, so any dip may correct just as fast. Or Tether dies slowly and other Stable coins take over the market, with crypto prices unaffected.
I don't confess to understand and give every way to protect yourself - I am not a financial adviser. But I have been exploring shorting Tether, which can be done via Kraken. Keep some BTC on it and then short USDT. It may not be perfect, but if Tether bomb actually goes off, at least your insured.