Bitcoin Buyers Beware: Questions To Ask Before Investing

It has become abundantly clear that the U.S. dollar’s reign is nearing its end. Although the bond market remains intact and small changes in interest rates persist, the dollar is becoming less valuable every week, signaling that the currency crisis is accelerating.

Therefore, it is natural for people to seek alternatives to protect the purchasing power of their hard-earned money. Many are turning to precious metals like gold and silver, but the younger demographic of Gen Z and millenials have put their trust in the cryptocurrency realm. 

So, is Bitcoin a safe investment?

Presently, I am weary of cryptocurrency for several reasons related to risk management. 

First, cryptocurrency exchanges remain largely unregulated, leaving nothing to protect users from the risk of security disruptions that can render an exchange insolvent. 

A cautionary tale is that of Tokyo-based crypto exchange, Mt. Gox, which once held the title of the world’s largest Bitcoin exchange, which handled over 80% of all Bitcoin transactions at one point in 2014. That was, until it was discovered that hackers had managed to steal a staggering equivalent of $460 million from the exchange and its users. Up until recently, the Mt. Gox hack was considered the biggest crypto heist in history — but cyberattacks have not slowed down, and digital currencies are still vulnerable to digital theft.  

Second, the loss of faith in Tether poses a risk to Bitcoin.

Tether, also known as USDT, is the world’s largest stablecoin, which also remains unregulated. Caught up in a serious scandal as of recently, allegations that Tether holds significant reserves of Evergrande corporate debt has caused even greater skepticism. 

Currently being audited by the SEC, the stablecoin giant is feeling the pressure to answer the question: if $69 billion worth of Tether are currently in circulation, where are the billions of dollars backing it stored? 

Furthermore, Tether’s user agreement statement reveals that they accept no obligation to redeem a single USDT. And the optics to worsen; according to a recent article published by Jordan Atkins on popular cryptocurrency news platform CoinGeek, the New York Attorney General’s investigation has confirmed that Tether was lying about its backing. 

Still, Tether and its general counsel, Stuart Hoegner, denied the outcome of the NYAG investigation, saying that the investigation made “no negative findings whatsoever that tethers were not fully backed, nor were ever issued without backing.” 

This lack of transparency is posing a major risk to the future of Bitcoin — which already doesn’t look too bright as it currently stands. 

Reports have emerged suggesting that unbacked USDT is being printed and exchanged for BTC, falsely inflating the Bitcoin price. And, with Bitcoin and Ethereum commonly being purchased with Tether, a huge chunk of all transactions are connected to them; meaning a collapse in Tether will undeniably trigger the collapse of Bitcoin. 

In other words: without a Tether fiat system, there is no Bitcoin. That is food for thought, especially when one considers that Bitcoin was meant to be the alternative to fiat. 

I speak about this topic in more detail in my recent video, Currency Crisis Continues. You can watch it here. 

Wall Street has caught on to crypto. It’s time to watch out

I have always said that when Wall Street gets behind something, watch out!  The Wall Street crowd can push an investment very high in a short amount of time.  This is what happened with Bitcoin in 2021.  What many investors do not know is the Wall Street Crowd plays both sides, which means they help to PUMP up the “investment” and then short (bet on lower prices) and start a campaign to DUMP the same financial product.  

The Wolf of Wall Street, Jordyn Belford, stated his concerns about Tether in an interview on CoinDesk a couple of months ago, calling it a scam. According to him, while he assumes that they are currently running a clean operation they likely did some things early on that they now regret. 

“The department of justice has a broad latitude of how they deal with these things, but I think they would really give Tether a very serious black eye,” said Belford. “I would be surprised if it didn’t cease to exist, because there are other solutions besides Tether that do not have that sort of baggage.”

Final thoughts: what does the future hold for Bitcoin?

Bitcoin is not going to disappear, however I believe the ability to use it will become drastically hampered in the coming years. With no intrinsic value, backed by nothing tangible, the future is uncertain.  My view is in the minority and the value of Bitcoin is argued daily on the Internet, so consider hearing both sides. 

When compared to an asset like gold, which has been a well-established store of value for millenia, it becomes evident where some one’s wealth should be stored. But if you’re deep into crypto, here’s a word of advice for you. 

It may be time to take your profits and stand aside. With proper risk management, you will be able to remain calm and happy because you understand the risk and have managed it properly. And ultimately that will help you become a seasoned trader. Patience is a prudent move at this point in time. 

Hear the rest of my thoughts on Bitcoin, cryptocurrencies, and more by tuning into the Crypto Conspiracy podcast via this link. 

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