Tether (USDT) price falling to $0.95(coinmarketcap.com)
coinmarketcap.com
Tether (USDT) price falling to $0.95
https://coinmarketcap.com/currencies/tether/#charts
94 comments
$2,000,000,000+ worth issued without proof of backing? What value did Tether add that people were willing to deal with it as a middleman to dollars?
Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.
Side note: The graph could use some TLC. The colors are indistinguishable and there are no static historical charts on the page, just the graph since my visit.
That is could be used to avoid all those annoying banking laws (AML, KYC, etc).
I never really understand this claim, but also don't have a deep expertise in AML/KYC. How does Tether help here?
The situation isn't too complex: Bitfinex is a crypto exchange that had difficulty finding banks that would work with them. Banks are regulated and expose themselves to a great deal of liability if they provide banking for services for illegal endeavors. As you can imagine, some crypto exchanges are deemed too risky.
Tether and Bitfinex are the same thing, though both will vigorously deny that, but it's patently clear that they're intimately related. Tether has variously been able to get banking services, and thus act as a USD deposit to enter crypto exchanges like Bitfinex (USD -> USDT tether -> trade for Bitcoin, etc.). Because it's so clear that Tether is simply used as a way to circumvent AML/KYC, Tether continues to have difficulty securing banking services.
This current uncoupling of USD:USDT(tether) is due to such a banking issue. There are two major risks with Tether:
* Liquidity: without access to banking services, Tether uncouples and there can be a 'bank run' as the majority of funds are unavailable to maintain the stable price.
* Reserves: right now there are no guarantees that each Tether is backed by actual USD. You simply have to trust Tether on this. Ultimately Tether may be a sort of fractional reserve, and thus enough selling pressure will make Tether worthless.
At it's core, it's just a clumsy obfuscation.
Tether and Bitfinex are the same thing, though both will vigorously deny that, but it's patently clear that they're intimately related. Tether has variously been able to get banking services, and thus act as a USD deposit to enter crypto exchanges like Bitfinex (USD -> USDT tether -> trade for Bitcoin, etc.). Because it's so clear that Tether is simply used as a way to circumvent AML/KYC, Tether continues to have difficulty securing banking services.
This current uncoupling of USD:USDT(tether) is due to such a banking issue. There are two major risks with Tether:
* Liquidity: without access to banking services, Tether uncouples and there can be a 'bank run' as the majority of funds are unavailable to maintain the stable price.
* Reserves: right now there are no guarantees that each Tether is backed by actual USD. You simply have to trust Tether on this. Ultimately Tether may be a sort of fractional reserve, and thus enough selling pressure will make Tether worthless.
At it's core, it's just a clumsy obfuscation.
Thank you for that answer!
Would you mind briefly expanding on "Because it's so clear that Tether is simply used as a way to circumvent AML/KYC"? Not being contrarian, I just don't understand how this part works.
Would you mind briefly expanding on "Because it's so clear that Tether is simply used as a way to circumvent AML/KYC"? Not being contrarian, I just don't understand how this part works.
(Maybe.)
Until the bank they are using to accept USD decides to check them on that (per https://news.ycombinator.com/item?id=18214935):
@patio11 19h19 hours ago Eventually, a bank or, more likely, a regulator is going to say “Actually this doesn’t look like a legit deposit that we’re uncomfortable with supporting due to AML/regulatory reasons. It looks an awful lot like proceeds of crime intermingled with grey money.”
@patio11 19h19 hours ago More And the terrifying outcome, from the cryptocurrency economy perspective, is the regulator doing what the USFH did with respect to Mutum Sigillum (Mt Gox’s US front): “OK, we’re going to give you two choices.”
@patio11 19h19 hours ago More Door #1: Prove that it’s legal money. This should be trivial for you because KYC is the law and your compliance should be automatic. So have your lawyer suit up. BTW we expect this to take 3+ years.
Door #2: We propose a 50% haircut.
@patio11 19h19 hours ago Eventually, a bank or, more likely, a regulator is going to say “Actually this doesn’t look like a legit deposit that we’re uncomfortable with supporting due to AML/regulatory reasons. It looks an awful lot like proceeds of crime intermingled with grey money.”
@patio11 19h19 hours ago More And the terrifying outcome, from the cryptocurrency economy perspective, is the regulator doing what the USFH did with respect to Mutum Sigillum (Mt Gox’s US front): “OK, we’re going to give you two choices.”
@patio11 19h19 hours ago More Door #1: Prove that it’s legal money. This should be trivial for you because KYC is the law and your compliance should be automatic. So have your lawyer suit up. BTW we expect this to take 3+ years.
Door #2: We propose a 50% haircut.
> Prove that it’s legal money.
A clear abuse, it's the government's job to prove illegal deeds. Holding customers funds hostage under the threat of bankruptcy, while the company navigates the complex legal minefield the government itself created is just about the most corrupt system and farther from the rule of law you can get, short of direct confiscation.
They even went as far as claiming MtGox was a money transmitting business because it was a customer of Dwolla, and so customers of Dwolla could send money to themselves by withdrawing and depositing dwolla to MtGox: http://k.lenz.name/LB/2013/05/16/seizure-warrant-against-mut...
A clear abuse, it's the government's job to prove illegal deeds. Holding customers funds hostage under the threat of bankruptcy, while the company navigates the complex legal minefield the government itself created is just about the most corrupt system and farther from the rule of law you can get, short of direct confiscation.
They even went as far as claiming MtGox was a money transmitting business because it was a customer of Dwolla, and so customers of Dwolla could send money to themselves by withdrawing and depositing dwolla to MtGox: http://k.lenz.name/LB/2013/05/16/seizure-warrant-against-mut...
A major use of USDT is that you can sell your cryptos when they're high, converting them to USDT, which holds it's value. Then, when the crypto prices drop, you buy in again, and repeat.
By keeping it entirely in the crypto space, your country's tax system can't charge you for capital gains.
Too bad BMW dealers don't accept Tether. At some point you want to cash out, and who knows if this will be around in 50 years at all?
pardon my ignorance, but wouldn't you eventually convert your USDT to 'real'/fiat currency at some point? It would be taxed then as 'other income' right?
I'm guessing the theory (which may or may not be tax evasion depending on your local tax code) is that you're not taking the profit until you sell for fiat or take it out of the exchange.
> By keeping it entirely in the crypto space, your country's tax system can't charge you for capital gains
This is blatant, willful and permanently-documented tax evasion, an amusing combination of illegality and stupidity.
This is blatant, willful and permanently-documented tax evasion, an amusing combination of illegality and stupidity.
Havent you heard? In America this is just plain smart!!
No, it’s not. It means you don’t pay capital gains when you’re merely exchanging one form of crypto for another. You have not realized any gains until you have converted your crypto into real assets. Converting from one form of crypto to another for the purposes of arbitrage only delays the taxes. It never eliminates them.
This is really no different than selling and buying stocks in an IRA account.
This is really no different than selling and buying stocks in an IRA account.
Crypto-crypto trades no longer enjoy the like-kind exchange tax treatment you're describing (in the US, as of 12/31/2017). The recent tax law narrowed that benefit to real estate only.
https://www.coindesk.com/owe-irs-crypto-crypto-trades/
https://www.coindesk.com/owe-irs-crypto-crypto-trades/
> no longer
On 31 December 2017, the IRS clarified that § 1031 does not apply to crypt-crypto trades. It did not say § 1031 applied to crypto-crypto trades before then.
The article you reference says "traders still may be able to argue that their transactions undertaken in 2017 and prior years were not taxable under the Section 1031 like-kind exchange rules," but that "the application of the like-kind exchange rules to crypto transactions is far from certain" [1, emphasis mine].
[1] https://www.coindesk.com/owe-irs-crypto-crypto-trades/
On 31 December 2017, the IRS clarified that § 1031 does not apply to crypt-crypto trades. It did not say § 1031 applied to crypto-crypto trades before then.
The article you reference says "traders still may be able to argue that their transactions undertaken in 2017 and prior years were not taxable under the Section 1031 like-kind exchange rules," but that "the application of the like-kind exchange rules to crypto transactions is far from certain" [1, emphasis mine].
[1] https://www.coindesk.com/owe-irs-crypto-crypto-trades/
I stand corrected.
> You have not realized any gains until you have converted your crypto into real assets
You transacted into (what you believed was) a proxy for cash. That's obviously selling.
Every tax jurisdiction has rules about this because every tax jurisdiction has idiots who thought they'd found a clever workaround. (I think the first American one involved a guy in the 19th century selling property for the key to a lockbox full of cash.)
You transacted into (what you believed was) a proxy for cash. That's obviously selling.
Every tax jurisdiction has rules about this because every tax jurisdiction has idiots who thought they'd found a clever workaround. (I think the first American one involved a guy in the 19th century selling property for the key to a lockbox full of cash.)
I feel that people believe that they can get away with things because they imagine a situation where you can argue on a technicality and get away with it.
In reality if they want to punish you for this they'll see right through it. Loopholes are only loopholes because there's an established history of authorities not willing to enforce it (brown paper bags around liquor bottles, "Suggested Donations").
In reality if they want to punish you for this they'll see right through it. Loopholes are only loopholes because there's an established history of authorities not willing to enforce it (brown paper bags around liquor bottles, "Suggested Donations").
> This is really no different than selling and buying stocks in an IRA account.
This is an insane assertion. One of the main points of an IRA is that the trades within it aren't taxable events. Trades made outside an IRA are taxable events.
This is an insane assertion. One of the main points of an IRA is that the trades within it aren't taxable events. Trades made outside an IRA are taxable events.
I understand the difference. All I meant is that in an IRA the trades are not taxed but the withdrawals are.
But I see the point here regarding a cash proxy.
Full disclosure: I have zero exposure to crypto. Not my cup of tea.
But I see the point here regarding a cash proxy.
Full disclosure: I have zero exposure to crypto. Not my cup of tea.
Your country may not automatically get tax records, but I'm pretty sure both exchanges would be taxable transactions under US tax rules.
Only have a cursory understanding of capital gains but shouldn't the exchange out of Tether back into $Crypto have zero gains if it's working as intended since there's no change in value of your holding?
Capital gains tax on securities (like tether) is assessed on the difference between what you paid for the security and what you sold the security for. You can denominate it in whatever you like (tether, bitcoin, gold, sheep, whatever), but it's assessed in USD at time of sale.
Essentially, you're being taxed on the income you got from holding that security, not for trading, it's just assessed when you trade.
Essentially, you're being taxed on the income you got from holding that security, not for trading, it's just assessed when you trade.
Yeah I'm aware of that much but toast0 said both transactions (which I took to mean for example BTC -> Tether and Tether -> BTC) would both be taxed which doesn't make sense where Tether is working as intended and holds value at $1. Of course the sale of BTC for Tether would be taxed because the market for that is moving but Tether in theory should not have an additional tax exposure just like selling BTC for USD then buying ETH doesn't require you to pay taxes on your ETH purchase with USD.
Sorry, you're right, if tether is working as marketted, it is a taxable transaction, but taxes are due on $0 of gain, so....
Maybe, but whoes to say these people are under the US Tax system?
These same rules generally apply in so major countries.
In the US you can be charged on those capital gains. Capital gains are assessed at time of sale, this includes both Crypto-Fiat as well as Crypto-Crypto.
The USDT pairs list here
https://www.coingecko.com/en/coins/tether/trading_exchanges#... can be intrigue
We have no proof $2B were issued.
It's possible that $2M were issued, and the rest don't even exist (or rather they are still controlled by the tether organisation).
It's possible that $2M were issued, and the rest don't even exist (or rather they are still controlled by the tether organisation).
The graph is tough to read as is. There's no labels for the x data and they y is autoranged. As of 1020 Eastern US time today, all I see are two horizontal lines. So I can see that both the Tether/Bitfinex/Bittrex/Poloniex cluster and the USD/Bitstamp/Kraken clusters are stable. But without an x label I can't tell if they're stable over the last hour, month, or year.
* If I mouse-over the x ticks, I can see that the graph spans ~10 minutes, but most people probably wouldn't have the patience. Now that I know it's been stable for ten minutes (is it usually unstable across ten minutes‽), my next question is 'how did it look over the last 30 days? 12 months? *
All in all, a cool site! Just a tip from the graph-nitpickers out here.
EDIT: I see now, this graph shows only current activity since page load. This was likely a tradeoff to simplify the design of the page such that the data didn't have to be stored on the server. Maybe the page is such that the data is requested directly from the exchanges themselves?
* If I mouse-over the x ticks, I can see that the graph spans ~10 minutes, but most people probably wouldn't have the patience. Now that I know it's been stable for ten minutes (is it usually unstable across ten minutes‽), my next question is 'how did it look over the last 30 days? 12 months? *
All in all, a cool site! Just a tip from the graph-nitpickers out here.
EDIT: I see now, this graph shows only current activity since page load. This was likely a tradeoff to simplify the design of the page such that the data didn't have to be stored on the server. Maybe the page is such that the data is requested directly from the exchanges themselves?
I'm using the web archive to compare:
https://web.archive.org/web/*/http://www.untether.space
EDIT: seems like Feb will always display 0.41% and the rest is 27.02%
https://web.archive.org/web/*/http://www.untether.space
EDIT: seems like Feb will always display 0.41% and the rest is 27.02%
This is very nice, thanks for taking the time to make this! The only complaints I have are 1) a history in the graph would be nice, and 2) lack of HTTPS.
Currently showing me $NaN (NaN%). Looks like your weightedAvg function doesn't work because the tetherPrices array is empty.
Please add HTTPS.
A note on the price reported by coinmarketcap -- that is a price derived from computing the average traded price of USDT across all exchanges, including ones that have no path to converting directly to USD.
What this means is that this dramatically overstates the price of tether. If you navigate to "market" [1] and change the "Pair" dropdown to "USD" you'll see the three exchanges that actually offer the pair. Bitfinex is the sponsor of Tether, so will always say $1; but currently they are apparently having banking problems.
Kraken and Bittrex offer independent markets so are a better fair reflection of the price, in the sense of "if you have tether, and want foldin' money right now, this is the current discount". Kraken has somewhat limited withdrawal capabilities at the moment as well, so their price also reflects a premium for the latency.
[1] https://coinmarketcap.com/currencies/tether/#markets
What this means is that this dramatically overstates the price of tether. If you navigate to "market" [1] and change the "Pair" dropdown to "USD" you'll see the three exchanges that actually offer the pair. Bitfinex is the sponsor of Tether, so will always say $1; but currently they are apparently having banking problems.
Kraken and Bittrex offer independent markets so are a better fair reflection of the price, in the sense of "if you have tether, and want foldin' money right now, this is the current discount". Kraken has somewhat limited withdrawal capabilities at the moment as well, so their price also reflects a premium for the latency.
[1] https://coinmarketcap.com/currencies/tether/#markets
It could have something to do with the arrival (soon to be a flood) of much-better financed and regulated stable coins such as the Gemini dollar:
To date, there has been no trusted and regulated digital representation of the U.S. dollar that moves in an open, decentralized manner like cryptocurrencies. Enter the Gemini dollar — a stable value coin (often called a “stablecoin”) that is (i) issued by Gemini, a New York trust company, (ii) strictly pegged 1:1 to the U.S. dollar, and (iii) built on the Ethereum network according to the ERC20 standard for tokens. ...
https://medium.com/gemini/gemini-launches-the-gemini-dollar-...
To date, there has been no trusted and regulated digital representation of the U.S. dollar that moves in an open, decentralized manner like cryptocurrencies. Enter the Gemini dollar — a stable value coin (often called a “stablecoin”) that is (i) issued by Gemini, a New York trust company, (ii) strictly pegged 1:1 to the U.S. dollar, and (iii) built on the Ethereum network according to the ERC20 standard for tokens. ...
https://medium.com/gemini/gemini-launches-the-gemini-dollar-...
> regulated stable coins such as the Gemini dollar
I still don't see how they satisfy their anti-money laundering requirements.
You can't have a token which is (a) anonymously traded, (b) freely redeemable for hard currency, and (c) compliant. Even if you modify (b) to "redeemable with approved KYC paperwork for hard currency," you still have the problem that you sold a token for cash to one person, redeemed it for cash to another person, and have no clue what happened in the middle.
One could completely remove (b), i.e. have a non-redeemable currency. But now you're closer to the precedent set by Liberty Reserve [1], in that the people who most want anonymous electronic dollars over real electronic dollars are people laundering money.
[1] https://www.nytimes.com/2013/05/29/nyregion/liberty-reserve-...
I still don't see how they satisfy their anti-money laundering requirements.
You can't have a token which is (a) anonymously traded, (b) freely redeemable for hard currency, and (c) compliant. Even if you modify (b) to "redeemable with approved KYC paperwork for hard currency," you still have the problem that you sold a token for cash to one person, redeemed it for cash to another person, and have no clue what happened in the middle.
One could completely remove (b), i.e. have a non-redeemable currency. But now you're closer to the precedent set by Liberty Reserve [1], in that the people who most want anonymous electronic dollars over real electronic dollars are people laundering money.
[1] https://www.nytimes.com/2013/05/29/nyregion/liberty-reserve-...
> anonymously traded
Where exactly does anyone claim that?
They have a team of lawyers and access to all the regulators by virtue of being such a huge exchange. Do you honestly believe they haven't consulted widely on this?
Where exactly does anyone claim that?
They have a team of lawyers and access to all the regulators by virtue of being such a huge exchange. Do you honestly believe they haven't consulted widely on this?
> They have a team of lawyers and access to all the regulators by virtue of being such a huge exchange. Do you honestly believe they haven't consulted widely on this?
I'll get back to you in a few days when I finish laughing... MtGox was also a huge exchange, I think the only sane thing to do at this point with Cryptos are to assume all exchanges are stupid, aren't solvent, haven't consulted lawyers, and/or don't know the law until it is proven otherwise. Exchanges that don't fit the criteria are the exception not the rule.
I'll get back to you in a few days when I finish laughing... MtGox was also a huge exchange, I think the only sane thing to do at this point with Cryptos are to assume all exchanges are stupid, aren't solvent, haven't consulted lawyers, and/or don't know the law until it is proven otherwise. Exchanges that don't fit the criteria are the exception not the rule.
The sheer ignorance surrounding cryptomarkets is quite staggering. I'm first to call a good part of it a sham but simply writing off everyone is naive, low effort discourse.
Gemini is owned by the billionaire Winklevoss twins, its based in and regulated by NY, the most notoriously heavy handed cryptocurrency jurisdiction on Earth. Many exchanges won't even do business with customers from NY.
Think it's fair to say that they're not "stupid"
Gemini is owned by the billionaire Winklevoss twins, its based in and regulated by NY, the most notoriously heavy handed cryptocurrency jurisdiction on Earth. Many exchanges won't even do business with customers from NY.
Think it's fair to say that they're not "stupid"
It is not just Gemini, there have been three other new big "stablecoins" launched in the last month. USDC from Circle, CarbonUSD from Carbon, PAX from Paxos and lots of even smaller players entering the market.
If USDT is fully backed by real USD that shouldn’t affect the price.
There's a wave of full-reserve stablecoins with more careful regulatory strategies in the pipes. For example, Sila. * If you need programmable money, and also want access to US mainstream, then I think this is increasingly going to be where you go.
* https://medium.com/@blog_53353/announcing-sila-building-the-...
* https://medium.com/@blog_53353/announcing-sila-building-the-...
https://coinmarketcap.com/currencies/trueusd/
If it’s true that tether is fraudulently printing tethers, then Bitfinex has already pulled one of the largest heists in history.
An important case law regarding these types of digital cash operators would be liberty reserve.
https://www.nytimes.com/2013/05/29/nyregion/liberty-reserve-...
If it’s true that tether is fraudulently printing tethers, then Bitfinex has already pulled one of the largest heists in history.
An important case law regarding these types of digital cash operators would be liberty reserve.
https://www.nytimes.com/2013/05/29/nyregion/liberty-reserve-...
Cryptocurrency investors discover breaking the buck [0]. I wonder what painful lesson they'll have to relearn next?
[0] https://www.investopedia.com/terms/b/breaking-the-buck.asp
[0] https://www.investopedia.com/terms/b/breaking-the-buck.asp
Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?
All arbitrage opportunities are easy if your assumption that you're going to make money hold true.
Yeah. But like. How backed is it really.
If only a neutral third party, such as a respected auditing firm, could confirm they hold the cash in reserve.
The price being this low should mean that the market thinks there's a chance it won't go back up to $1.
I got a coin “HNcoin”.
I deem it worth $1.00! why? because I said so.
I will sell it to you for just 95c
Easiest arbitrage opportunity.
I deem it worth $1.00! why? because I said so.
I will sell it to you for just 95c
Easiest arbitrage opportunity.
You just explained the Federal Reserve...
The Fed is backed by the US Federal Government, which has quite some assets to cash in to pay off its obligations in the worst case. Tether has… nothing.
Also, you need USD. Even if every other economic transaction you make is in crypto, you have to pay your taxes in USD. This alone adds quite a bit of demand for fiat.
Yes, there are very few examples of fiat being issued without requiring taxes be paid in that same fiat, as a way to drive demand for the currency.
Fed has a few more economic considerations (esp. bank pressure and Treasury entanglements) than J. Random Scammer.
Sort of, but rather than being the guy posting on the internet the fed gets to draw on the GDP of a pretty big country.
Second point, 1 dollar is not a stable unit of value as viewed by other currencies. This is fine, you're valuing the fed vs currency x's backing resource.
Second point, 1 dollar is not a stable unit of value as viewed by other currencies. This is fine, you're valuing the fed vs currency x's backing resource.
Only if the federal reserve wasn't backed by the U.S. Military and did not have billions of people willing to trade with it's currency.
Assuming it goes back up to $1
That is a massive assumption, that very few people seem to currently hold.
I thought that was the whole point of fiat-backed crypto?
More and more people are starting to doubt that it actually is backed by anything.
That is a massive assumption, that very few people seem to currently hold.
I thought that was the whole point of fiat-backed crypto?
More and more people are starting to doubt that it actually is backed by anything.
That makes sense. Definitely sounds like there might be something fishy going on.
> I thought that was the whole point of fiat-backed crypto?
That is a key point of fiat-backed crypto. Whether Tether is an example of fiat-backed crypto is another question entirely. :)
That is a key point of fiat-backed crypto. Whether Tether is an example of fiat-backed crypto is another question entirely. :)
The fact the Tether who issued USDT for presumably something around $1 aren't buying it back themselves for an easy profit should tell you something.
I see these possibilities:
* The tether organisation doesn't have an effective way to buy back tethers. They might not have the processes/infrastructure in place.
* The tether organisation doesn't have the USD in liquid enough form to do said purchasing. For example, it might be in frozen bank accounts or offshore and take many days to transfer.
* The backing USD doesn't exist entirely.
* The tether organisation doesn't have an effective way to buy back tethers. They might not have the processes/infrastructure in place.
* The tether organisation doesn't have the USD in liquid enough form to do said purchasing. For example, it might be in frozen bank accounts or offshore and take many days to transfer.
* The backing USD doesn't exist entirely.
It doesn't tell you anything. Maybe they think the bitcoin price is going to shoot up 3xin the coming months so using their money to buy tether would be pretty stupid in that case no?
This is actually why it's so hard to tell from this whether or not this is something bad or just "normal" because tether price always reaches lower levels like this when people get out of it to buy cryptocurrencies, too.
This is actually why it's so hard to tell from this whether or not this is something bad or just "normal" because tether price always reaches lower levels like this when people get out of it to buy cryptocurrencies, too.
Maybe they think the bitcoin price is going to shoot up
3xin the coming months so using their money to buy tether
would be pretty stupid in that case no?
If they have invested the fiat in bitcoins, they aren't backed by US$ any more.
This is right - Tether buying back their USDT means that they get to retire 1 USDT for 0.95c of their backing reserves, turning the remaining 0.05c into profit which they can then invest wherever they want.
[deleted]
How?
It’s been a long standing allegation that tether is a fraud, counterfeited by Bitfinex to manipulate the spot price in a scheme to steal bitcoins (buying BTC with free tether printing).. [1][2]
The telltale sign of a bankrun at Bitfinex seems to be playing out, as you can see the spot price rises on Bitfinex meanwhile on other exchanges BTC spot price drops. Coinciding with the drop in USD:USDT pair losing its peg is a huge red flag.
Bitfinex might attempt a last ditch effort to avoid a MTGOX like collapse, it could be though a large enough drop of the spot price on other exchanges along with Bitfinex purchasing back their customer deposits in a fraudulent version of short selling.
Yet that assumes Bitfinex/Tether has liquid cash reserves to leverage such a trade.
https://i.imgur.com/pBO0nfY.png
https://i.imgur.com/2DkzWWm.png
[1] https://www.nytimes.com/2018/06/13/technology/bitcoin-price-...
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066
[2] https://medium.com/@bitfinexed/latest
It’s been a long standing allegation that tether is a fraud, counterfeited by Bitfinex to manipulate the spot price in a scheme to steal bitcoins (buying BTC with free tether printing).. [1][2]
The telltale sign of a bankrun at Bitfinex seems to be playing out, as you can see the spot price rises on Bitfinex meanwhile on other exchanges BTC spot price drops. Coinciding with the drop in USD:USDT pair losing its peg is a huge red flag.
Bitfinex might attempt a last ditch effort to avoid a MTGOX like collapse, it could be though a large enough drop of the spot price on other exchanges along with Bitfinex purchasing back their customer deposits in a fraudulent version of short selling.
Yet that assumes Bitfinex/Tether has liquid cash reserves to leverage such a trade.
https://i.imgur.com/pBO0nfY.png
https://i.imgur.com/2DkzWWm.png
[1] https://www.nytimes.com/2018/06/13/technology/bitcoin-price-...
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066
[2] https://medium.com/@bitfinexed/latest
> The telltale sign of a bankrun at Bitfinex seems to be playing out, as you can see the spot price rises on Bitfinex meanwhile on other exchanges BTC spot price drops.
As also evidenced by the fact that the price of all other crypto assets is going up, meaning that people are dumping Tether at a loss to buy other stuff at inflated prices.
As also evidenced by the fact that the price of all other crypto assets is going up, meaning that people are dumping Tether at a loss to buy other stuff at inflated prices.
The fundamental problem with arbitrage -- and one of the major reasons why this moment has been predicted by many -- is that Tether will not redeem USDT for USD. So you can buy all the "cheap" Tethers you like, but you can't turn them back into fiat.
Pretty much the only major exchange that does USD/USDT trades is Kraken, and the rate is looking distinctly wobbly today: https://www.coingecko.com/en/price_charts/tether/usd
Pretty much the only major exchange that does USD/USDT trades is Kraken, and the rate is looking distinctly wobbly today: https://www.coingecko.com/en/price_charts/tether/usd
There’s a lot of doubt that they’re actually backed by fiat, hence the fluctuations.
It is an arbitrage, but not risk-free arbitrage. The current price differential between USDT and USD can be explained two ways.
One is that there's an ~8% chance of tether being long-term without value. That seems to be the dominant interpretation among critics of Bitfinex and Tether.
The other is that a short-term liquidity crunch is causing investors to take a haircut in order to obtain liquidity in their desired currency.
Rumors abound, but except for one tangential announcement from Bitfinex [1], I haven't heard much that is definitive about the current state of fiat deposits/withdrawals on Bitfinex. Currently the price differentials themselves are the strongest signal.
[1] https://medium.com/bitfinex/fiat-deposit-update-october-15th...
One is that there's an ~8% chance of tether being long-term without value. That seems to be the dominant interpretation among critics of Bitfinex and Tether.
The other is that a short-term liquidity crunch is causing investors to take a haircut in order to obtain liquidity in their desired currency.
Rumors abound, but except for one tangential announcement from Bitfinex [1], I haven't heard much that is definitive about the current state of fiat deposits/withdrawals on Bitfinex. Currently the price differentials themselves are the strongest signal.
[1] https://medium.com/bitfinex/fiat-deposit-update-october-15th...
If one was able to convert it directly to 1 USD immediately then yes it would be a super easy arbitrage and the price of Tether would never fluctuate from 1 USD more than very small amounts (which would be arbitraged and restored) The problem is that you can't do that, and the pricing is indicating that the market no longer believes that Tether is worth 1 USD, so isn't willing to pay that much.
reposting my comment on this issue from 8 months ago: https://news.ycombinator.com/item?id=16182423#16183604
As tensions with USDT rise, my prediction is that MakerDAO decentralized stablecoin will take over the market in 2019. You can see how issued DAI market cap pumping up steadily all year long almost with no break:
https://mkr.tools/
So I'm accumulating position in MKR.
Here is YC interview with backer of MakerDAO:
https://blog.ycombinator.com/blockchain-investing-with-olaf-...
Andressen Horrowitz also increasing their position in MKR:
https://medium.com/makerdao/a16z-crypto-purchases-6-of-mkr-b...
https://medium.com/makerdao/maker-sells-12m-of-mkr-to-partne...
Although there are some concerns that it's economically impossible to create fully decentralized stablecoin. Historical example:
https://en.wikipedia.org/wiki/Black_Wednesday
Failed stablecoin example:
https://coinmarketcap.com/currencies/nubits/
We will see as time goes on. Anyway, it's very interesting economic experiment.
P.S. So YC HN readers keep downvoting me even if I give links to interview on YC. Okay...
https://mkr.tools/
So I'm accumulating position in MKR.
Here is YC interview with backer of MakerDAO:
https://blog.ycombinator.com/blockchain-investing-with-olaf-...
Andressen Horrowitz also increasing their position in MKR:
https://medium.com/makerdao/a16z-crypto-purchases-6-of-mkr-b...
https://medium.com/makerdao/maker-sells-12m-of-mkr-to-partne...
Although there are some concerns that it's economically impossible to create fully decentralized stablecoin. Historical example:
https://en.wikipedia.org/wiki/Black_Wednesday
Failed stablecoin example:
https://coinmarketcap.com/currencies/nubits/
We will see as time goes on. Anyway, it's very interesting economic experiment.
P.S. So YC HN readers keep downvoting me even if I give links to interview on YC. Okay...
Except that Tether price often fluctuates and it has gone lower than $0.95 before, it is already on its way back up since this link was posted. As another commenter mentioned the coinmarketcap.com price is based on the average price of trades at various exchange, if there is a lot of sell pressure it will naturally temporarily fluctuate lower.
Don't get me wrong, I think Tether is up to something fishy but I don't think that they have billions of dollars less in assets than the number of Tether issued.
Don't get me wrong, I think Tether is up to something fishy but I don't think that they have billions of dollars less in assets than the number of Tether issued.
This also caused the price of bitcoin to go up https://www.forbes.com/sites/billybambrough/2018/10/15/bitco...
That’s not the true USD exchange rate, the “price” goes up on exchanges with USDT (tether) meanwhile any exchange with access to actual normal USD banking withdrawals have an abnormally lower spot price. If this activity persists, it would indicate the devaluation of tether which accounts for the vast majority of trade volume across the major exchanges.
Also note, the article you linked to is not Forbes but just a random blogger using the public Forbes blogging api.
Also note, the article you linked to is not Forbes but just a random blogger using the public Forbes blogging api.
So you're saying - this is good for Bitcoin?
There doesn't seem to be any particular new development, just a string of unsubstantiated rumors and hoaxes:
https://blokt.com/news/too-much-fud-bitcoin-pumps-tether-dum...
That's not to say that Tether does not have major credibility issues and dubious liquidity, just that no new publicly available information would justify the movement. On the other hand, when a bank run is in progress, it's irrelevant if it was started by a rumor because the rumor becomes a self fulfilling truth, especially in the face of shaky financials.
That's not to say that Tether does not have major credibility issues and dubious liquidity, just that no new publicly available information would justify the movement. On the other hand, when a bank run is in progress, it's irrelevant if it was started by a rumor because the rumor becomes a self fulfilling truth, especially in the face of shaky financials.
> That's not to say that Tether does not have major credibility issues and dubious liquidity, just that no new publicly available information would justify the movement.
When a jenga tower topples over, it's not usually because someone played especially badly, but because almost any touch at all would make it fall.
When a jenga tower topples over, it's not usually because someone played especially badly, but because almost any touch at all would make it fall.
This is a huge buying opportunity!
I always found it amusing bitcoin needs to be backed by USD. Wasn't the whole BTC religion about how bad and unstable traditional currencies are? Meanwhile no central bank is trying to save Tether.
It's not about backing with value, it's about liquidity. Traders want to use USD assets on a market and be able to transfer them as a digital asset between exchanges with minimal 3rd party fees. Transferring USD through a bank account can be expensive.
> Transferring USD through a bank account can be expensive
I keep hearing this, yet can instantly and for no charge electronically transfer under $10,000 between various accounts, and with minimal (often waived) wire charges, much larger quantities more reliably (and with less risk) than using a "stable coin".
I keep hearing this, yet can instantly and for no charge electronically transfer under $10,000 between various accounts, and with minimal (often waived) wire charges, much larger quantities more reliably (and with less risk) than using a "stable coin".
In my experience, wiring fiat USD from a non-US exchange to a a US bank account is slow (days) and has hidden fees (my bank, their bank, and someone in between).
No that wasn't how it started. It was going to become something you could use to buy groceries with.
Ofcourse it BECAME just another financial wizardry tool, that's honestly all the tech sector really does. The smartest people on the planet are thinking about how to make more money.
Ofcourse it BECAME just another financial wizardry tool, that's honestly all the tech sector really does. The smartest people on the planet are thinking about how to make more money.
http://www.untether.space/
The spread between Bitcoin priced in Tether and Bitcoin priced in USD has been holding steady at <1% until now, but as I type this, the risk premium is at 8.4% and climbing. Looks like the Untethering has begun.
For the curious, source at https://github.com/jpatokal/untether and also submitted as a Show HN at https://news.ycombinator.com/item?id=18219034.