“Wow, that thing’s still around?” – Attack of the 50 Foot Blockchain

  • By Amy Castor and David Gerard

Bitcoin hit a new all-time high! Just! Tether passed 100 billion USDT. And folks are complaining they can’t get their money off Coinbase. But this is fine.

Whoa, what just happened here? The short answer is that the bitcoin price peak was a paper-thin stablecoin pump.

The talk of ETFs causing the bitcoin price rise is vapid nonsense to feed lazy finance reporters who should know better. It’s stablecoin shenanigans over at Binance.



We heard bitcoin was good now and all our objections were answered, but that was only for two minutes yesterday afternoon

On November 10, 2021, bitcoin peaked at $68,990. The price tipped over that for two minutes, from 15:04 to 15:05 UTC yesterday, March 5, 2024.

Various outlets listed the new peak differently but we prefer to quote Coinbase, the highest-volume actual-dollar exchange, where bitcoin hit $69,325 — less than 1% higher than the previous record. [CoinDesk]


The precise moment bitcoin peaked on Coinbase. Times in UTC.


The price promptly dropped $2,000 straight away, and then another $8,000 by 20:00 UTC, as the bagholders tried desperately to cash out — while they could, as Coinbase had yet another inexplicable outage, coincidentally with all the other exchanges. [Coinbase, archive]

Coinbase support tweeted at 20:44 UTC: “We are aware that some users may be experiencing errors when transacting. Our team is investigating this issue and will provide an update shortly. Your assets are safe.” Funds are safu, guys. [Twitter, archive]

Last week, Coinbase users were seeing $0 in their account balances. But that was just a glitch, right? [CNBC]

After stretching to reach that peak for two minutes, the price went back down — almost as if someone only just managed to manipulate bitcoin high enough for a moment to generate some headlines.

If the pumpers could have pumped bitcoin higher, they would have. But the trouble with high numbers is that bagholders expect to be able to sell at that price — for real dollars.

That’s the difference between fake dollars on the way up and real dollars on the way down.

The bitcoin prices we’ve mentioned in this post are from the BTC-USD trading pair. The BTC-EUR pair on Coinbase suffered a flash crash just after the peak — almost as if there was no liquidity on the exchange and nobody cares about trading bitcoins for euros. It took 10 minutes for the price to reach parity with other trading pairs again. [CoinDesk]

How good an asset is bitcoin? The price swung $10,000 in a single day — in fact, over five hours. That’s the sort of stability you need for your retirement investments when you’re definitely not just gambling.

The world reacts: “Meh”

We said previously that for a new bitcoin bubble to start four conditions had to be true:

  1. A price over the previous high of $69,000;
  2. Regulators not blocking a lot of the easy on-ramps for dollars;
  3. Tether and similar stablecoins not to be shut down;
  4. Enough ordinary retail suckers with the actual dollars to throw at the whales.

The bitcoin price did beat its previous high. Exchange-traded funds (ETFs) have provided a really easy way in for dollars. And Tether and FDUSD are still alive and kicking, for some reason.

But retail is responding with a resounding “oh, that thing. When’s the weather on?”

Retail volumes on the exchanges are notably not doing anything. (Except trying to cash out.) ETF net inflows haven’t gone up. We’re seeing a lot of GBTC holders dumping their shares at last.

Even Matt Levine from Bloomberg only mentioned the bitcoin high in his newsletter today in the list of links at the end. Binance’s new cryptocurrency perfume, “Crypto,” got its own section. We suffered imagining what the crypto perfume must smell like, so now you can suffer too. [Bloomberg, archive; Twitter, archive]

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No, it’s not ETFs

The SEC approved 11 cash-only spot bitcoin ETFs earlier this year.

The press claims that these ETFs must be the reason for bitcoin’s recent price climbs. This is because reporters keep asking the opinions of people who market crypto for a living and push the ETF meme hard.

The standard promotional claim is that ETFs are bringing in $2 billion a day of new bitcoin purchases and that this is why the price is going up. This is completely false. Some days are net positive, others are net negative.

Over the entire existence of the bitcoin spot ETFs, the net influx is $8 billion. But a lot of that seems to have come from other bitcoin-related holdings elsewhere, rather than being fresh dollars that have never been in crypto before.

The volume of bitcoin ETFs is on the order of $2-3 billion of trading a day — buying and selling. Much of that is just churn — money moving from GBTC to the other ETFs with more reasonable management fees.

We like The Block’s bitcoin ETF volume charts. [The Block]


Bitcoin goes up $4,000 between 04:00 and 05:00 UTC or 11pm to midnight Eastern Time, well known as prime US market hours for securities.


The price of bitcoin shot up $4,000 between 11pm and midnight last night ET,  a time when there are definitely lots of very real dollars being poured into bitcoin ETFs on the US stock exchanges that are open and in full swing. Or not.

Alternately, Coinbase Custody chose to buy new bitcoins to fill out the ETFs’ backing reserves over that hour from 11pm to midnight — the best time of day to do financial business.

Alternately, it’s manipulation.

Tether and FDUSD

Tether has been setting its own records. Its issuance of USDT broke 100 billion on March 4, the day before BTC briefly peaked. In the last three months alone, Tether printed 10 billion USDT.


Tether’s all-time issuance.


Price discovery happens in a market. Wherever most of an asset’s trade volume is happening, that’s probably what’s doing most of the work to determine the price. Billions of fake dollars can pump BTC even more easily than real dollars.

The highest volume bitcoin exchange is still Binance, which you’ll remember is also a recently criminally convicted conspiracy — just what you want for a trustworthy asset.

First Digital USD (FDUSD) is a relatively new stablecoin. It was introduced onto Binance in June 2023, after Binance lost its solid footing with long-time partner Tether and its own stablecoin, BUSD, was shut down in early 2023. The total issuance of FDUSD is 3 billion.

There’s $2-3 billion volume each day of bitcoin spot ETF trading — but Binance BTC-FDUSD does $11.5 billion a day and Binance BTC-USDT does over $6 billion a day. The stablecoins account for 22% of total bitcoin spot trading volume. [CoinGecko; Binance; CoinGecko]

Trading volumes between bitcoin and these two stablecoins alone swamp the trading volume of all the ETFs.

We know that USDT is being printed out of thin air and sent out as a “loan,” and that “loan” is claimed to be the reserve backing the issuance of the tethers. FDUSD is similarly created by an opaque process — First Digital claims full US dollar backing for all FDUSD, but we flatly do not believe them.

DesoGames on Twitter thinks it will all end in tears. He’s pretty sure that FDUSD is the next Terra-Luna. “The current price of Bitcoin is not real because the biggest pair on the biggest exchange in crypto is fraudulent; and that pair happens to be Bitcoin/FDUSD.” [Twitter thread]

What could you do to the bitcoin price if you could casually print 13 billion pseudo-dollars?

Welcome to real markets

Bitcoiners have long dreamed of getting crypto into people’s retirement funds. Can you imagine the horror of being retired and watching a large percentage of your investment in a bitcoin ETF vanish in a matter of hours?

The Arizona Senate is considering adding bitcoin ETFs to retirement funds. Let’s hope they come to their senses. [Twitter, archive]

Investing in bitcoin miners, like RIOT and MARA, is just as risky.

Real markets have real regulators. What will happen when bitcoin crashes and ETF buyers sue on the basis that the manipulated market wasn’t sufficiently disclosed?

(This is why risk factors in SEC filings need to include everything up to alien invasions.)

ETF issuers tend to specifically mention Tether as a risk, for what that’s worth. [e.g., Grayscale 10-K; BlackRock S-1 amendment 2]

This is good news for bitcoin

Bitcoin hit a new all-time high and promptly crashed 15%. This is good news, if you think about it.

Surely this is a reasonable, reliable, and sensible financial instrument and not speculative trash whose price discovery happens in an unregulated offshore casino — whoops, turns out it’s precisely that.

Bitcoin is so illiquid that as soon as it hits a new high, bagholders rush to the exits and the price crashes. No amount of stablecoin pseudo-dollars can fix this.

The real tragedy is that the pump only managed to take the bitcoin price just over $69,300 — they just couldn’t pump it all the way to $69,420.


Hey hey hey!

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