11/10/2018/19:30CET
Cryptos took a hammering along with Tether FUD. Let's dive in for a short look.
Yesterday started a market rout in the traditional markets with multiple percentage losses across the board.
Things do not seem to be doing too much better today either. But today started a sharp pull back in #cryptos as well.
Seems that there is some FUD around #Tether reappearing which is causing a spillover of panic.
I will not dissect the Tether news here. There are many better people around doing that at the moment. What I want to do is to show you what look at to see how Tether is reacting in the market.
Being the first and most widely used Stable coin tied to the USD, Tether's importance on exchanges that do not have stable banking partnerships is vital. Binance, the largest fish in the exchange world only offers USDT as a Fiat safe haven pair on its exchange. This is pretty huge.
As an investor in the crypto markets and a holder of some USDT, what am I looking at to indicate danger?
I am focusing on the BTCUSD:BITFINEX - as the biggest spot BTCUSD pair vs BTCUSDT:BINANCE as the biggest BTCUSDT pair by volume.
Let's take a look at a snapshot of these 2 in real time. These are the hourly charts...
Here they are side by side. Bitfinex with native USD first and Binance with USDT second.
- they are trading at 6326.10 usd and 6329.14 usdt respectively. So no news here, this spread is nothing outstanding. What it is meaning is that it takes 3.04 USDT more to buy a #bitcoin.
- comparing volumes: we have as a 21ma, 1,807 vs 1,954 btc traded per hour as an average over the last 21 hours. This is more difficult to compare since each exchange has its own characteristics, but again no extreme changes.
What am I looking out for?
Any slippage from these relative levels will be a warning sign to watch out for till this blows over.
In particular will be a raise in volume and price of the USDT price vs the USD price. This will occur if there is a loss of faith in the USDT. It will take more of them to buy BTC as bitcoin will be seen as a safer haven than USDT.
This differential is what to watch out for. A blowout beyond 1-2% i.e. 60-120 usd(t) would be worrying.
Lastly I will share for you what exchanges trade the BTCUSDT pair and their dominance in the market. This is out of CMC and I think these percentages are counting volume against all BTCXXX pairs so take with a grain of salt.
The reason for the caveat, is this...
Bitmex is the oversized gorilla in CMC markets volume ratings because of margin trading.
As always guys, leave comments, have fun and trade safe.