Bitcoin price briefly flirted with the $30,000 mark – a barrier it has attempted to cross in the past and failed – and retrenched its gains in less than an hour. The cryptocurrency crashed by 7% in that period because cryptocurrencies in anonymous wallets were moved, feeding into speculation about an impending sale.

As of this writing, it is changing hands at $29,720, up 5% from its price a day earlier.

Binance Lawyers Up

The price of bitcoin depends on trading patterns at Binance, the world’s biggest cryptocurrency exchange by trading volume. But that exchange is facing regulatory headwinds from authorities in the United States.

According to a report in the New York Times yesterday, Binance is lawyering up for a counter offensive. It has hired attorneys from top legal firms and even funneled funds into a political action committee (PAC). The PAC is headed by Krishna Juvvadi, former lawyer for ridesharing company Uber – a company that used scorched earth tactics to fight regulators. This means the exchange might be getting ready to aggressively represent its case.

Binance was among the biggest winners of FTX’s collapse last November. According to data from research firm Kaiko, its overall market share, including derivatives and spot markets, jumped to 65% from 50% earlier.

However, regulation-related threats are not a major cause of worry for the exchange because it derives a significant chunk of its trading volumes from outside the United States. The real worry for bitcoin price emanating from Binance is that of Tether, which accounts for the most trades against Bitcoin.     

The Tether Worry

The stablecoin market has hit many roadblocks since the beginning of this year. BUSD is sunsetting its operations. USDC’s overall market capitalization has plunged. Stablecoin regulation, which almost seemed a certainty last year, is now in peril because of fractious dealings between Republicans and Democrats.

Tether has been a net beneficiary of these developments. The stablecoin, which is not regulated, has shrugged off the last vestiges of accountability by refusing to produce any more attestation reports. The reports were mandated by the New York Department of Financial Services (NYDFS) as part of a settlement against it and were supposed to prove that its circulating supply was adequately backed by fiat reserves.

Why is Tether a problem?

Because its market capitalization has skyrocketed by roughly $16 billion since the beginning of this year. But there is no proof that the new coins are backed by fiat currencies or, even, that they are being used for trades.

A Weak Competitor

Previously, Binance’s stablecoin BUSD was a counter to unregulated Tether. But it is closing shop. In recent months, a competitor to Tether’s dominance has emerged in the form of TUSD – a stablecoin issued by Archblock. As of this writing, it is the second-most traded coin against bitcoin.

According to a previous CoinDesk report, the market depth for TUSD has improved but its liquidity remains lower than that of Tether’s relative to bitcoin. But that’s not saying much.

The bar for liquidity was low to begin with. Besides, the TUSD story is also full of crypto lies and obfuscations, making it an easy target for regulators.

One could make the case that macroeconomic developments, in the form of volatility and crises, will attract investors to bitcoin, just as they did during the pandemic. But the excesses of that frenzy are being shed from the investing ecosystem.

Investors are exiting their holdings in funds related to bitcoin, leaving dubious coins like Tether and TUSD to do the heavy lifting for its price.