by David Kranzler
Investment Research Dynamics
“There was euphoria in stocks and cryptos late in 2017, but now we are seeing much more retail participation. There was a lot of optimism even 6 months ago, but now the worst stocks (penny stocks) are leading the way instead of FAAMNG. This is a sign we are in the final stages of the bubble. Investors in money losing hype stocks and cryptocurrencies will have nothing to hold onto when the momentum shifts.” – Alex Pitti, “The Warning Sign That Correctly Called The Last Bitcoin Crash Is Back,” Seeking Alpha
In going down the Bitcoin rabbit-hole and digging even deeper into the inner-workings of the Bitcoin market, I discovered that some of the offshore Bitcoin trading platforms have enabled Bitcoin buyers/traders to employ up 100x leverage. The offshore platforms do not accept dollars. There’s an intermediate cryptocurrency which is considered a “stablecoin” called Tether issued by Tether Ltd. U.S. Bitcoin buyers using the offshore platforms to trade Bitcoin have to exchange dollars for Tethers or other stablecoins. Supposedly a Tether is fixed at $1. Tethers are then used to purchase Bitcoins on margin.