Is the EU ready to ban crypto mining? Could some of the persistent Tether FUD eventually materialize? Is Microstrategy’s debt still manageable? Will all this ETF hype end with an epic ‘rug pool’ by the SEC? Or will it be a ‘black swan’ event, unpredictable by definition? The crypto market needs some catalyst for an inevitable wipeout pullback, and quite a few potential triggers are visible today.
Markets never move up and right only; a significant high-timeframe wipeout is imminent, whether sooner or later, and from either lower or higher levels. Typically, it requires some catalyst. So, without trying to predict an unpredictable, which of the currently known risk scenarios might trigger such a pullback?
The European Commission (EC) is reportedly developing a dubious methodology to calculate and mitigate Bitcoin’s ‘environmental’ impact. Why the quotation marks? As per Daniel Batten, clean-tech investor and co-founder of CH4-Capital, EC’s approach is unscientific, relying only on a suite of reports that Central Banks and Ripple Corporation have financially backed. This methodology was previously challenged and debunked by Cambridge University in 2018, casting further doubt on its validity.
“The fact that the EC has ignored both the science and the sea-change in the Bitcoin ESG narrative this year shows that their intentions have nothing to do with sustainability and everything to do with protecting entrenched interests that could be disrupted by Bitcoin. If the EC wins, BTC will be officially labeled”an environmentally harmful asset that undermines sustainability goals for the EU,” – Daniel Batten.
MicroStrategy, known as the largest corporate holder of Bitcoin, continues expanding its BTC holdings. In the meantime, FUD surrounding MicroStrategy’s debt situation is becoming increasingly persistent. However, most experts consider these concerns to be far exaggerated.
Tether FUD is much more persistent and truly never-ending. The specifics may change over time, while the magnitude of the potential threat it poses only seems to increase.
From the most recent developments, Tether’s banking partner Britannia Financial faced a lawsuit related to a $1B deposit, casino operators with ties to Tether were implicated in money laundering, and, most notably, there are investigations into Tether’s ties to fraudulent Alameda Research and FTX.
“Tether has been one of the major mysteries of the cryptosphere for a long time. It has never been audited and has been described as being”practically quilted out of red flags.” Matt Levine says, “I feel like eventually, Tether is going to be an incredibly interesting story, but I still don’t know what it is.” (Source)
BlackRock issued a warning regarding risks major stablecoins pose to the market, which sounds reasonable. On the other hand, Scott Melker noted, “BlackRock wouldn’t be involved in crypto if stablecoins actually posed serious threats to the space. Tether and Circle combined account for a large portion of the total market cap and a MASSIVE amount of volume. They are essential!”
On its part, Tether freezes hundreds of millions in USDT on demand and, reportedly, grants the FBI a peek behind the curtain. It has actually survived more FUD than any other entity in crypto, and these days, it is about to hit a historic milestone, powering El Salvador’s visionary Freedom Visa Program through technology support.
Lastly, U.S. regulators continue their rampage against crypto. You all heard what JP Morgan Chase CEO Jamie Dimon said the other day:
“The only true use case for [crypto] is criminals, drug traffickers, money laundering, tax avoidance. If I was the government, I’d close
The good news is Jamie’s not the government. However, the actual ‘government,’ regulators, doesn’t seem to be more peaceful. Following the recent settlement between Binance and the US Department of Justice (DoJ), officials from the Commodity Futures Trading Commission (CFTC) have declared their intent to rigorously pursue crypto exchanges that breach trade laws, regardless of their geographical location:
“CFTC’s jurisdiction is not confined by borders. It should be unequivocally clear that the CFTC will continue its relentless pursuit of non-US entities involved in alleged illicit activities within the cryptocurrency space.”
This suggests that the Binance case might be just the start of a broader regulatory crackdown.
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