Tether USDT is depegging from dollar(pro.coinbase.com)
pro.coinbase.com
Tether USDT is depegging from dollar
https://pro.coinbase.com/trade/USDT-USD
206 comments
A live chart won't have much longevity if this is a temporary divergence. As much as I want it to be true, I think this post should be deleted until there are secondary sources. @dang
USDT:USD at 0.98 happened twice in last 4 years and both times was successfully defended (research methodology: googled "usdt to usd" and clicked 5Y range in the chart)
If this drops below 0.95, it's popcorn time.
If this drops below 0.95, it's popcorn time.
@dang doesn't do anything but you can email problems with posts in. You can also flag bad posts, 'made up a title for generic page' is perfectly fair flag game.
You are implying that this kind of divergence has happened often in the past, which would then make this one not notable either.
If you have any such sources to back up that claim, perhaps you could post them here to support your deletion request?
If you have any such sources to back up that claim, perhaps you could post them here to support your deletion request?
https://news.ycombinator.com/item?id=31349988
https://news.ycombinator.com/item?id=31723438
Although both are secondary.
https://news.ycombinator.com/item?id=31723438
Although both are secondary.
I think the point was that the chart is going to keep updating until eventually what happens today (and is discussed in the comments) will not be visible from the link.
But I don't think deleting the post is necessary. When a more permanent source becomes available, @dang can switch the link and in the meantime we can keep discussing the chart.
But I don't think deleting the post is necessary. When a more permanent source becomes available, @dang can switch the link and in the meantime we can keep discussing the chart.
If you adjust the timeframe on OP's linked chart you can see that Tether depegged briefly earlier this year.
https://i.imgur.com/3PJVGhA.png
https://i.imgur.com/3PJVGhA.png
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Bitfinex is maintaining the peg, nothing exciting is happening here https://trading.bitfinex.com/t/UST:USD?type=exchange
These headlines come out every couple of months, nothing ever happens. In fact, odds are that Tether makes a bunch of money every time this happens.
These headlines come out every couple of months, nothing ever happens. In fact, odds are that Tether makes a bunch of money every time this happens.
Yeah, in any given instance, "nothing happens" is true more likely than not. On the other hand, this is equally true in a game of Russian roulette. In both cases, "nothing ever happens" is not necessarily the right lesson to draw from the observation.
The nature of tail risk is that it seem completely impossible until, one fine day, it manifests explosively. Various other corners of crypto have recently been exposed to this lesson, often at some expense. It doesn't seem unreasonable to expect more damage to the ecosystem before the lesson is well and truly learned.
The nature of tail risk is that it seem completely impossible until, one fine day, it manifests explosively. Various other corners of crypto have recently been exposed to this lesson, often at some expense. It doesn't seem unreasonable to expect more damage to the ecosystem before the lesson is well and truly learned.
A) Bitfinex all morning has been showing rosier numbers than other exchanges. Which, of course they would, Tether is their scam.
B) You aren't doing any favors to the reputation of crypto bros by doing such a hard core ostrich impression.
B) You aren't doing any favors to the reputation of crypto bros by doing such a hard core ostrich impression.
Maybe they have enough liquidity for it, since it’s their scam? I guess that FTT/Binance situation created an additional demand everywhere. The same depeg was observed after LUNA(?) news spread, afair, on a similar market.
There's almost $70 bn worth of USDT in the world. I don't believe Bitfinex has $70 bn of assets backing it. How much do they have? I dunno. But if there's a run we're gonna find out.
If their latest attestation is to be believed, they have $52B in cash+equivs including $28B in treasury bills
So it will need a big big run until they start hitting their dodgy reserves in metals and loans
That's of course unless the attestation is BS or defrauded which is entirely possible
So it will need a big big run until they start hitting their dodgy reserves in metals and loans
That's of course unless the attestation is BS or defrauded which is entirely possible
Note that treasury bills (and more so treasury bonds) have taken a beating with the increase in interest rates... so I wouldn't be surprised if they lost quite a bit there.
So is there now an arbitrage opportunity? Or are the fees so high that it's not practical for 2% price delta?
That's the question I had. Ostensibly, people are giving away a dollar for 98 cents right now. I'm confused about why anyone would want to do that unless they thought that tethered dollar isn't actually worth a real US dollar. If USDT is fine, seems like free money is on the table...
They are doing it because nobody has any idea whether USDT is fine except for Tether. So every time it de-pegs, rational people have to run towards the exit and take a loss, since nobody knows whether this is a temporary “Tether makes some bank on fear” incident, or if it’s the big one.
Stablecoin issuers have basically two jobs. One is to maintain the peg. But the really important job is to convince people that even if the peg temporarily breaks: the money is still there and it won’t be the start of a collapse. Tether does neither of these things. And worse: they have a financial incentive to sweep their customers into periodic panics, so they can buy up Tethers at a discount. Nobody should be anywhere near this ecosystem, and in a world where competing options exist it’s amazing to me that people are.
Stablecoin issuers have basically two jobs. One is to maintain the peg. But the really important job is to convince people that even if the peg temporarily breaks: the money is still there and it won’t be the start of a collapse. Tether does neither of these things. And worse: they have a financial incentive to sweep their customers into periodic panics, so they can buy up Tethers at a discount. Nobody should be anywhere near this ecosystem, and in a world where competing options exist it’s amazing to me that people are.
If you aren't sure Tether is good for it, why hold USDT at all? If you hold it, why sell it at every minute movement? That doesn't look like rational behavior, that looks like burning money. If you don't have risk tolerance or don't trust this asset - why own it at all?
I suspect some people are forced to because they don’t have access to fiat banking through their exchanges. So Tether is their only way to move and store “dollars”. I would hope that we’d see adoption of better US-regulated stablecoins (and we have) but Tether remains sticky around the world.
There are other stablecoins than Tether. And also, if you don't have any other options, what exactly you are selling USDT for? You must get something in exchange for it, not? So if you think that something is better, why didn't you use it at the first place? I could get it if it was a huge difference - USDT is at 0.50 or something - but if you sell at 0.995 then your preference for USDT was never that strong. For active money trader, it may make sense - if you manage billions, any tiny optimization in risk/reward can yield millions. But if we're talking about retail customer, it makes little sense.
Yeah there is an arbitrage opportunity, it’s not going to last very long though.
It's hard for Tether to de-peg when BTC and ETH are crashing? When everyone sells the former, the demand for USDT is net positive.
With FTX collapsing, many are eager to get entirely out of cryptocurrencies.
Not true. People may be desperate to cash out and be selling their USDT ASAP.
There are also other, more reputably, stablecoins, like USDC.
Afaik there is no way for it to depeg, because they officially not allowing withdrawals, only for the "institutional investors" and at their discretion. You can't bankrun if the bank is closed and doors are barred :) .
Small fluctuations probably come from the single existing in the world USD-USDT pair on Kraken, with minimal liquidity, it's just there for fun I think.
That's an interesting observation. There's gotta be a pretty limited upper bound on redemptions because I know there is rather extensive KYC involved which 99% of Tether holders couldn't pass, high minimums, and country restrictions. If the 3% from treasuries on 60 billion dollars isn't enough to satisfy them then operating even at 80% reserve (which in the absence of leaks could probably go undetected for a very long time) would mean they stole about 12 billion dollars which should be enough many times over for a private jet, a whole new identity, extensive plastic surgery, and high ranking government officials of some Caribbean island in perpetuity.
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Tether is a fiat currency supported by the crypto oligarchs. It doesn't have to be backed. It just has to avoid taxes, avoid governments, and avoid sequestration.
You can't take a tether and redeem it for a dollar, so it doesn't really even have a price. Tether is just a placeholder for a dollar in the crypto-world.
Furthermore, Bitcoins aren't really priced in United States Dollars anymore, they are priced in Tether Dollars. The price reported on CNBC is tether dollars.
It's so synthetic, even that chart doesn't really matter. So, where can we find real dollars being exchanged for Bitcoin? We can find that in the GBTC trust. I would argue the actual price of a Tether is equal to the GBTC discount, which currently sits at 37%. So, a tether dollar is actually about 0.62 dollars.
You can't take a tether and redeem it for a dollar, so it doesn't really even have a price. Tether is just a placeholder for a dollar in the crypto-world.
Furthermore, Bitcoins aren't really priced in United States Dollars anymore, they are priced in Tether Dollars. The price reported on CNBC is tether dollars.
It's so synthetic, even that chart doesn't really matter. So, where can we find real dollars being exchanged for Bitcoin? We can find that in the GBTC trust. I would argue the actual price of a Tether is equal to the GBTC discount, which currently sits at 37%. So, a tether dollar is actually about 0.62 dollars.
Tether is definitely shady, but everything you stated is wrong.
You can redeem tether for a dollar anytime on their website [1].
Bitcoin has multiple markets on multiple exchanges. Some markets are between BTC and USD, some are between BTC and USDT, some are between BTC and BUSD (Binance's coin that is pegged to USD etc.). The reported price is a weighted average of these markets. It is never just USDT.
There are 7 exchanges on the first page of CoinMarketCap where you can buy Bitcoin with dollars directly [2]. Look for BTC/USD pair.
[1] https://tether.to/en/
̌[2] https://coinmarketcap.com/currencies/bitcoin/markets/
You can redeem tether for a dollar anytime on their website [1].
Bitcoin has multiple markets on multiple exchanges. Some markets are between BTC and USD, some are between BTC and USDT, some are between BTC and BUSD (Binance's coin that is pegged to USD etc.). The reported price is a weighted average of these markets. It is never just USDT.
There are 7 exchanges on the first page of CoinMarketCap where you can buy Bitcoin with dollars directly [2]. Look for BTC/USD pair.
[1] https://tether.to/en/
̌[2] https://coinmarketcap.com/currencies/bitcoin/markets/
You cannot redeem a tether for a dollar. You can allegedly redeem $101,000USDT for $100,000, once you've paid the $150 initial club fee. https://tether.to/en/fees/
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> You can redeem tether for a dollar anytime on their website [1].
You could also withdraw your money from Bernie Madoff up until the day the Ponzi scheme collapsed because the money ran out.
So the question is whether the money could run out, or whether they have 1:1 reserves.
You could also withdraw your money from Bernie Madoff up until the day the Ponzi scheme collapsed because the money ran out.
So the question is whether the money could run out, or whether they have 1:1 reserves.
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That's not so accurate. The real pegging is by exchanges which deposit real dollars back into your bank account. You know the real mayhem starts when the exchanges start stopping withdrawals.
Are exchanges obligated to conduct a trade? Ie. Are they like a bank, holding your deposit? Or are they like a third party FX booth at an airport?
If the latter, how is this not the most perilous currency to hold?
If the latter, how is this not the most perilous currency to hold?
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Thether is not Dollar. Nobody is obliged to give you Dollars for Thether. Until you make the deal.
Banks are not obliged to exhange currencies for you either, by the way. Many do, at a rate favorable to them.
Banks are not obliged to exhange currencies for you either, by the way. Many do, at a rate favorable to them.
Right. So it’s definitely an “exchange” and not a “we’re giving you your deposits back.”
Thanks.
Thanks.
> So, where can we find real dollars being exchanged for Bitcoin?
At an over-the-counter exchange? You can literally give paper money and receive crypto and vice versa.
At an over-the-counter exchange? You can literally give paper money and receive crypto and vice versa.
The vice-versa bit seems quite tricky at times, especially times like this.
Away from Tethers for second, given the enormous GBTC discount to quoted BTC price is there any reason to purchase BTC with USD rather than buying GBTC with USD?
Discounts that aren’t instantly arbitraged away usually have a reason.
I don’t know in this case but it sounds like people don’t trust GBTC.
I don’t know in this case but it sounds like people don’t trust GBTC.
ETFs are not your friends.
No redemption or creation allowed in GBTC while you get crushed by fees
If Tether has real liquid reserves and can meet redemption requests, then the peg will return to ~$1. If Tether does not have sufficient reserves and stops honoring redemptions, then the peg will collapse.
Unpopular opinion: This could be investor panic and a temporary liquidity squeeze.
In May Tether weathered a significant liquidity crunch and recovered.
Unpopular opinion: This could be investor panic and a temporary liquidity squeeze.
In May Tether weathered a significant liquidity crunch and recovered.
In May Tether went down to a whopping 0.9982 USD and people cried it was the end of Tether. It recovered.
In April 2017 Tether went down to 0.9213 USD and people cried it was the end of Tether. It recovered too.
Don't get me wrong, I think eventually Tether will fall, it's all just too shady to survive long-term. But I don't think it seems it's happening now and I'm not sure it'll even happen like this. It'll start out with rumors that people can't redeem their USDT for USD, and people will pull out in a flash crashing Tether/Bitfinex in the process. It'll be faster and harder than what we've seen before.
And by the metrics so far, it's not fast nor hard enough to cause this.
In April 2017 Tether went down to 0.9213 USD and people cried it was the end of Tether. It recovered too.
Don't get me wrong, I think eventually Tether will fall, it's all just too shady to survive long-term. But I don't think it seems it's happening now and I'm not sure it'll even happen like this. It'll start out with rumors that people can't redeem their USDT for USD, and people will pull out in a flash crashing Tether/Bitfinex in the process. It'll be faster and harder than what we've seen before.
And by the metrics so far, it's not fast nor hard enough to cause this.
Return to peg wouldn't really indicate anything about collateral... we are watching secondary market, apparently only the big boys (100k+ players) are interacting with bitfinex directly.
This crunch appears to be going lower than the May dip. We shall see what happens!
lol- Tether has never honored any real redemption requests, near as I can tell.
Tether doesn't honor redemptions and never has so your theory is wrong.
Would be interesting to watch the circulating supply - and whether they managed to shrink the market cap.
Currently at 69,613,437,846 USDT.https://coinmarketcap.com/currencies/tether/
It would be very suspicious if this number doesn't go down on their next update.
Currently at 69,613,437,846 USDT.https://coinmarketcap.com/currencies/tether/
It would be very suspicious if this number doesn't go down on their next update.
It was >1.00 recently, it all depends on external factors ( like btc increased to 21k before dropping to 16k ) because panicked people trying to get money out by buying btc, then converting to usdt and finally converting to hard cash.
ELI5, how? Isn't USDT supposed to be a 1:1 with USD?
Update: I get it thanks, so 1 USDT == 1 USD, but the USDT token in itself could be bought/sold at any price. I mean that's pretty obvious but I never thought of USDT as a separate instrument, I thought it was a literal "map of USD into the crypto world" (which it is, kind of, but not really, dang).
So, USDT is pretty much a future backed by USD, right?
Update: I get it thanks, so 1 USDT == 1 USD, but the USDT token in itself could be bought/sold at any price. I mean that's pretty obvious but I never thought of USDT as a separate instrument, I thought it was a literal "map of USD into the crypto world" (which it is, kind of, but not really, dang).
So, USDT is pretty much a future backed by USD, right?
You can't control the secondary market. I can sell my Tethers for whatever value I want. If I think that, for some reason, their value is zero, I can try to sell at a discount before others realize this.
The point is that tether is wlsupposed to be willing to buy back tethers at $1 each so that if the price drops below $1 they buy all the sub $1 tether until the price returns to $1.
You can sell it at a discount but why if you can get $1 for it. That makes no sense.
For tether to depeg something else must be going on
You can sell it at a discount but why if you can get $1 for it. That makes no sense.
For tether to depeg something else must be going on
It can temporarily depeg if there are more people selling than there are people who are able to redeem who are incentivised to defend the peg
On Bitfinex the peg has held strong because Bitfinex have a close relationship with Tether and enabled customers to convert USD/USDt freely (for now)
Other exchanges are experiencing either a temporarily blip (will eventually get arbitraged away) or it's the beginning of Tether being insolvent. Time will tell
On Bitfinex the peg has held strong because Bitfinex have a close relationship with Tether and enabled customers to convert USD/USDt freely (for now)
Other exchanges are experiencing either a temporarily blip (will eventually get arbitraged away) or it's the beginning of Tether being insolvent. Time will tell
>people who are able to redeem who are incentivised to defend the peg
This doesn't make any sense. Either you can sell it for $1 or you can't. If you can then it's free money to buy tether from people selling below $1 and selling it back to tether for $1.
I would describe the relationship between tether and bf as more than "close" they have the same owner.
This doesn't make any sense. Either you can sell it for $1 or you can't. If you can then it's free money to buy tether from people selling below $1 and selling it back to tether for $1.
I would describe the relationship between tether and bf as more than "close" they have the same owner.
They are, they just aren't buying them back on coinbase. Tether don't manage the secondary market (cexes and dexes)
Though the minimum redeemable amount is $100k https://tether.to/en/fees
Why they are depegging is people are selling for under a dollar on coinbase (perhaps in panic); and Alameda Research (re: FTX exchange) who normally makes a ton of money doing the arbitrage between dollars and tether is having liquidity problems, so not doing it currrently.
Though the minimum redeemable amount is $100k https://tether.to/en/fees
Why they are depegging is people are selling for under a dollar on coinbase (perhaps in panic); and Alameda Research (re: FTX exchange) who normally makes a ton of money doing the arbitrage between dollars and tether is having liquidity problems, so not doing it currrently.
so thinking about this.
assumption: bitfinex has "dollars" to backup every USDT.
If bitfinex will buy a USDT for a $1 if it drops below $1 to maintain the peg, they can do this because they have "dollars" backing each share.
however, they would also have to destroy that USDT on purchase (as they just spend the $1 backing it). They could print more USDT (/ sell that back) for $1 and they would be whole again, but if there is downwards pressure on USDT, one should expect to see the market cap for tether to drop while bitfinex is buying/destroying currently existing USDT.
If one doesn't see this drop, wouldn't that be indicative of a problem?
assumption: bitfinex has "dollars" to backup every USDT.
If bitfinex will buy a USDT for a $1 if it drops below $1 to maintain the peg, they can do this because they have "dollars" backing each share.
however, they would also have to destroy that USDT on purchase (as they just spend the $1 backing it). They could print more USDT (/ sell that back) for $1 and they would be whole again, but if there is downwards pressure on USDT, one should expect to see the market cap for tether to drop while bitfinex is buying/destroying currently existing USDT.
If one doesn't see this drop, wouldn't that be indicative of a problem?
Does destroying currency (reducing the amount in circulation) put downward pressure on it? Not in my experience.
I (believe) what I said if there's downward pressure on the currency, therefore to maintain the peg they have to buy it (and in a sense destroy it). not that destroying it leads to downward pressure, but that we should see a reduction in market cap. I'm wondering if we can see this fluctuation in market cap.
Wonder if its a friction thing. Do you have to setup a special account to redeem on the primary channel?
The "official" channel has a MOQ of $100,000: https://tether.to/en/fees/
There is a huge amount of friction. It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. As always, the question is what actual assets Tether has to meet its claims.
There is a huge amount of friction. It's not clear whether they run market-maker operations to pick up the spread between Tether and $1. As always, the question is what actual assets Tether has to meet its claims.
Alameda Research (re: FTX exchange) normally makes a ton of money doing the arbitrage between dollars and tether but its having liquidity problems, so not doing it currently.
> It's not clear whether they run market-maker operations to pick up the spread between Tether and $1.
Of course they do.
Of course they do.
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Yes, it is, which in practical terms means that the company behind Tether should own real-world assets that cover all the outstanding USDT.
The fact that people are willing to trade their USDT coins for less than 1 USD means that they do not believe those "real-world assets" exist in sufficient quantity. In other words, they are afraid that Bitfinex (USDT issuer) is scamming them and prefer to convert to American dollar, even at slight loss.
The fact that people are willing to trade their USDT coins for less than 1 USD means that they do not believe those "real-world assets" exist in sufficient quantity. In other words, they are afraid that Bitfinex (USDT issuer) is scamming them and prefer to convert to American dollar, even at slight loss.
> Yes, it is, which in practical terms means that the company behind Tether should own real-world assets that cover all the outstanding USDT.
Asset. Not assets.
There is only one asset that an operation so big and trusted by so many should hold and that is U.S. Treasuries.
If you feel frisky you could do G-8 govt. bonds but that's about it really. And you are taking a chance on the forex exchange.
FTX just imploded because they didn't realize this simple fact. If you are a custodian and you are not advertising yourself as an active asset manager you should stick to US Treasuries and even that could be considered a breach because you should keep USD in a bank.
Keep USD in a bank and you have nothing to fear.
Asset. Not assets.
There is only one asset that an operation so big and trusted by so many should hold and that is U.S. Treasuries.
If you feel frisky you could do G-8 govt. bonds but that's about it really. And you are taking a chance on the forex exchange.
FTX just imploded because they didn't realize this simple fact. If you are a custodian and you are not advertising yourself as an active asset manager you should stick to US Treasuries and even that could be considered a breach because you should keep USD in a bank.
Keep USD in a bank and you have nothing to fear.
You can't really keep $69,613,437,845.79 (at time of writing) in a bank. At that point, you are the bank. In the case of Tether, Deltec in the Bahamas. https://www.deltecbank.com/about-us/?locale=en
Tether themselves seem to be based in Taiwan: https://assets.ctfassets.net/vyse88cgwfbl/RPHIloRD3eE4J5QYNR...
Taiwan's extradition situation is .. informal. Because Taiwan does not officially exist. But there have been extraditions from Taiwan to the US.
Tether themselves seem to be based in Taiwan: https://assets.ctfassets.net/vyse88cgwfbl/RPHIloRD3eE4J5QYNR...
Taiwan's extradition situation is .. informal. Because Taiwan does not officially exist. But there have been extraditions from Taiwan to the US.
> FTX just imploded because they didn't realize this simple fact.
They fully knew this. There is no business in keeping USD in USD (or US bonds for that matter.)
They fully knew this. There is no business in keeping USD in USD (or US bonds for that matter.)
Trading fees when your volume is billions? Nothing? Also what about IPO so that you can exit and enjoy 500M-1B of real net worth?
1 real billion > 20 make believe
1 real billion > 20 make believe
People are selling on exchanges, so the price goes down. That's unrelated to what it's backed by.
You can officially redeem USDT 1:1 for USD. If you believe that it's fully backed and that the company honors all redemptions, you would buy a lot of USDT below $1 now, redeem it, and make a good profit via arbitrage. These buys will drive the price up again so that it goes back to $1.
Thus, the price reflects the trust in USDT backing.
You can officially redeem USDT 1:1 for USD. If you believe that it's fully backed and that the company honors all redemptions, you would buy a lot of USDT below $1 now, redeem it, and make a good profit via arbitrage. These buys will drive the price up again so that it goes back to $1.
Thus, the price reflects the trust in USDT backing.
Can you give an example
Tether actually doing redemptions? Never really happened, as far as I am aware.
This most definitely happened (also for private people).
Can you provide a cite/link for a private individual being able to redeem tether? I’ve never seen a confirmed case.
Just a lot of misdirection, bs, and confirmed cases of people not being able to actually do it despite promises.
Just a lot of misdirection, bs, and confirmed cases of people not being able to actually do it despite promises.
Sure,
> “I’ve been minting/redeeming USDT on an institutional scale for over 3 years with multiple desks!” – said Ryan Salame, Head of OTC at Alameda Research, before adding
https://www.trustnodes.com/2021/01/05/alameda-research-revea...
> “I’ve been minting/redeeming USDT on an institutional scale for over 3 years with multiple desks!” – said Ryan Salame, Head of OTC at Alameda Research, before adding
https://www.trustnodes.com/2021/01/05/alameda-research-revea...
So not a private individual, and also the guy at the center of the major crypto collapse right now, whose exchange is imploding? Because they apparently can’t find the cash they need to service customer requests? [https://www.bbc.com/news/business-63577783]
Got it.
Do you have any others?
Got it.
Do you have any others?
Here's another individual speaking on behalf of a corporation and at the very center of the FTX collapse
> It's sort of funny hearing people claim that you can't create/redeem USDT for $.
> Like, I don't know what to tell you, you can, and we do.
https://twitter.com/sbf_ftx/status/1349096853346816001
> It's sort of funny hearing people claim that you can't create/redeem USDT for $.
> Like, I don't know what to tell you, you can, and we do.
https://twitter.com/sbf_ftx/status/1349096853346816001
I can’t tell if you’re being sarcastic or not.
That is the same entity controlled by the same dude above. The one that is imploding due to a liquidity crisis. FTX.
Which is at least partially imploding due to…. Not being able to get customer funds out in the form of cash?
So again, do you have an example of an actual individual able to get actual cash out?
Preferably also not someone neck deep in the Tether mess, with huge incentives to make stuff up, and not actively in the middle of going bankrupt?
Edit: even better, it looks like FTX committed blatant fraud. So yeah. I’m taking anything they have said as likely the opposite of true.
That is the same entity controlled by the same dude above. The one that is imploding due to a liquidity crisis. FTX.
Which is at least partially imploding due to…. Not being able to get customer funds out in the form of cash?
So again, do you have an example of an actual individual able to get actual cash out?
Preferably also not someone neck deep in the Tether mess, with huge incentives to make stuff up, and not actively in the middle of going bankrupt?
Edit: even better, it looks like FTX committed blatant fraud. So yeah. I’m taking anything they have said as likely the opposite of true.
Would you believe Binance if they came out and said that the Tether redemption process works as stated?
From the trustnodes article, there's a link to: https://etherscan.io/address/0x1E65141A6ea081F382B737141137f...
There, we see the Alameda and FTX transactions, which we know the Alameda transactions are for redemption and we know FTX (via Sam Bankman-Fried) says redemptions work. We also see that Binance has sent the same sort of transaction (e.g. From Binance 4 to Bitfinex 3).
You started with: "Can you give an example Tether actually doing redemptions?"
I sent the trustnodes article.
You then criticized it based on the ongoing Alameda/FTX fiasco. Sure, that's all a mess and any statements like "FTX is fine" were nonsense and there's zero reason to trust them with your money. But, does that mean that they lied about their experience redeeming Tethers?
It seems that for some folks the only way they'll ever believe things like, "Tether does redeem for USD" is by actually going through the process. For Tether, that's a process requiring $100,000 to figure out. And if it works, why would you bother posting about it on the internet when Tether itself continually reminds people that redemptions are being processed?
From the trustnodes article, there's a link to: https://etherscan.io/address/0x1E65141A6ea081F382B737141137f...
There, we see the Alameda and FTX transactions, which we know the Alameda transactions are for redemption and we know FTX (via Sam Bankman-Fried) says redemptions work. We also see that Binance has sent the same sort of transaction (e.g. From Binance 4 to Bitfinex 3).
You started with: "Can you give an example Tether actually doing redemptions?"
I sent the trustnodes article.
You then criticized it based on the ongoing Alameda/FTX fiasco. Sure, that's all a mess and any statements like "FTX is fine" were nonsense and there's zero reason to trust them with your money. But, does that mean that they lied about their experience redeeming Tethers?
It seems that for some folks the only way they'll ever believe things like, "Tether does redeem for USD" is by actually going through the process. For Tether, that's a process requiring $100,000 to figure out. And if it works, why would you bother posting about it on the internet when Tether itself continually reminds people that redemptions are being processed?
Considering that binance is not a regulated entity (and in fact is banned in a growing list of countries due to alleged criminal activity [https://en.m.wikipedia.org/wiki/Binance]), and relies on Tether having the appearance of redemptions to exist, as that is their primary method of getting money in and out of their exchange, and other exchanges like Bitfinex had principles directly involved in setting up and running Tether, despite historic statements that they were independent entities.
They have the exact same issue.
Binance is literally completely untrustworthy here.
Literally the only people who say they can do anything regarding redemptions with Tether appear to be insiders with a vested interest (in the billions to tens of billions of dollars) in it looking like you can do Tether redemptions.
Which is my whole point. And you keep reinforcing it while not realizing you’re doing so.
Tether got prosecuted by the US Treasury department because of flat out lies about currency and assets backing it. Have you read the indictment? It’s pretty damning, and has a lot of concrete information in it regarding what little actual banking infrastructure they had, which was essentially none (or at least little to no LEGAl infra).
Tether has a long history of flat out lying on exactly this topic.
My exact point is, there is zero evidence from anyone who isn’t deeply in bed with Tether.
They have the exact same issue.
Binance is literally completely untrustworthy here.
Literally the only people who say they can do anything regarding redemptions with Tether appear to be insiders with a vested interest (in the billions to tens of billions of dollars) in it looking like you can do Tether redemptions.
Which is my whole point. And you keep reinforcing it while not realizing you’re doing so.
Tether got prosecuted by the US Treasury department because of flat out lies about currency and assets backing it. Have you read the indictment? It’s pretty damning, and has a lot of concrete information in it regarding what little actual banking infrastructure they had, which was essentially none (or at least little to no LEGAl infra).
Tether has a long history of flat out lying on exactly this topic.
My exact point is, there is zero evidence from anyone who isn’t deeply in bed with Tether.
It's fear. When everyone is making money, confidence is high in crypto institutions and pegs are strong. But when a major crypto institution like FTX (that was supposed to be as legit as the come) becomes insolvent after apparently squandering the deposited funds of users which weren't supposed to be invested in the first place, people start to think that maybe the party is over, and that maybe, just maybe, Tether doesn't have the funds to back up the USDT peg.
The way it's meant to work is tether acts as a market maker, always willing to buy and sell tokens at parity. Nobody would buy below that if they know tether is around. Tether, having issued the coins, should have sufficient capital to play that role. But if they spend too much of their capital, they lose the ability to fulfill their role.
Could a drop in the value of USDT represent a rush to get back into Bitcoin, Ethereum, etc after the recent fall rather than people attempting to convert USDT to dollars?
You technically can trade your USDT for 1 dollar to the issuer (I don't know how, but it is probably harder than just going to market and selling)
But this is people buying and selling their USDT, in a market, they can try to sell for a any price and if there is a lot of people trying to sell and not so much trying to buy, it naturally goes down in price
This variation though, while large, isn't that uncommon AFAIK
But this is people buying and selling their USDT, in a market, they can try to sell for a any price and if there is a lot of people trying to sell and not so much trying to buy, it naturally goes down in price
This variation though, while large, isn't that uncommon AFAIK
To those saying "if it's backed by dollars - isn't this an arbitrage opportunity" you are right.
But the key word there is "IF".
The crypto-world is essentially mass scale "creative-accounting". At the end of the day the MAXIMUM amount of money that can come out, is what went in.
And "money out" includes not just the operating costs, mining fees, and other real-world resources used, but also the staggering number of thefts, rug-pulls, etc.
But the key word there is "IF".
The crypto-world is essentially mass scale "creative-accounting". At the end of the day the MAXIMUM amount of money that can come out, is what went in.
And "money out" includes not just the operating costs, mining fees, and other real-world resources used, but also the staggering number of thefts, rug-pulls, etc.
Also - if you're tempted to point to stocks, etc. and say investing generates a return. That's correct. Because ultimately that capital is being deployed in a resource-generating activity.
E.g. you're financing a factory, that takes a thing and turns it into a more valuable thing. Or a software company which ultimately saves people time. Dig deeply enough into it and you see an actual rersource-generating activity at some level of abstraction. The net resource-consumption of crypto AND the cash outflows (rugpulls, exchanges, VCs, phishing) is truly staggering.
It doesn't matter if you convert that real-world loss into casino chips, then 17 credit cards, then chocolate-coated Monopoly money. Those abstractions aren't serving a purpose. They're there purely to obscure that clear underlying resource-loss as long as possible.
E.g. you're financing a factory, that takes a thing and turns it into a more valuable thing. Or a software company which ultimately saves people time. Dig deeply enough into it and you see an actual rersource-generating activity at some level of abstraction. The net resource-consumption of crypto AND the cash outflows (rugpulls, exchanges, VCs, phishing) is truly staggering.
It doesn't matter if you convert that real-world loss into casino chips, then 17 credit cards, then chocolate-coated Monopoly money. Those abstractions aren't serving a purpose. They're there purely to obscure that clear underlying resource-loss as long as possible.
The crypto-world is essentially mass scale "creative-accounting".
Surprise! This is inevitable without something (government perhaps?) to force transparency and accountability. Blockchain certainly can't do it.
Lacking this, everyone is essentially flying blind. It's impossible to read events in the "marketplace" without reliable data --- conditions tailor made for scams.
As it currently stands, the crypto "marketplace" was built by scammers for scammers. Swimming with sharks, it may be possible to pick up an easy meal --- but it's equally possible that you will *be* the meal.
Surprise! This is inevitable without something (government perhaps?) to force transparency and accountability. Blockchain certainly can't do it.
Lacking this, everyone is essentially flying blind. It's impossible to read events in the "marketplace" without reliable data --- conditions tailor made for scams.
As it currently stands, the crypto "marketplace" was built by scammers for scammers. Swimming with sharks, it may be possible to pick up an easy meal --- but it's equally possible that you will *be* the meal.
It’s too early to believe they’re going to collapse. They managed to shrink the market capitalization by 15~ billion USDT after the LUNA collapse [1] while intermittently losing the peg by about as much right now for a month. I wouldn’t store money with them though
[1] https://coinmarketcap.com/currencies/tether/
[1] https://coinmarketcap.com/currencies/tether/
The pro crypto people will say "Banks are the same, they don't actually have a vault full of dollars to honor all deposits". And that part is true. If everyone went to Bank of America right now and asked for all their money in cash the bank would say no.
But, what the crypto people are not telling you is that the US Government would step in and take ownership of the bank and give everyone their deposits back in checks within a few months or weeks. And because this feature of US Government regulation exists there is not going to be a bank run on Bank of America. Tether does not have this protection, so, people can panic, for good reason.
But, what the crypto people are not telling you is that the US Government would step in and take ownership of the bank and give everyone their deposits back in checks within a few months or weeks. And because this feature of US Government regulation exists there is not going to be a bank run on Bank of America. Tether does not have this protection, so, people can panic, for good reason.
Crypto set out on a bold mission to prove that government shouldn't be involved in the money supply --- and ended up demonstrating just the opposite.
> mass scale "creative-accounting"
Indeed, and these schemes tend to fall apart when money is no longer free (i.e. there exists a non-zero interest rate).
Also, in the process of the interest rate becoming non-zero, existing bonds fall in price (because investors would prefer the newer, higher-yield coupons).
The mistake (and also the reason for existence) of Tether was the ability to invest the money. Fractional reserve.
When your business model counts on investments always going up, you might go out of business.
Indeed, and these schemes tend to fall apart when money is no longer free (i.e. there exists a non-zero interest rate).
Also, in the process of the interest rate becoming non-zero, existing bonds fall in price (because investors would prefer the newer, higher-yield coupons).
The mistake (and also the reason for existence) of Tether was the ability to invest the money. Fractional reserve.
When your business model counts on investments always going up, you might go out of business.
There is actually a mechanism for creating money. It's debt.
The mechanism here is facilitating commerce.
A simple analogy is: You're selling oranges. I'm selling apples. Bartering is inefficient so we invented currency.
I don't have any money right now. I buy your orange with debt, you buy my apple, the fruit is used instead of rotting, etc.
Essentially we only make a deal because we want what we're getting more than what we have. So we're getting something worth (to us) e.g. 130% of what we're giving.
So every trade multiplies the effective resource by e.g. 30%. Debt facilitates the trade, while simultaneously creating the value.
Up. to. a. point.
Without spoiling the ending that everyone knows is coming... crypto is not this. Crypto is not facilitating any (legal) economic activity. Nobody is taking this and buying machinery with a resource-generating payback period.
The mechanism here is facilitating commerce.
A simple analogy is: You're selling oranges. I'm selling apples. Bartering is inefficient so we invented currency.
I don't have any money right now. I buy your orange with debt, you buy my apple, the fruit is used instead of rotting, etc.
Essentially we only make a deal because we want what we're getting more than what we have. So we're getting something worth (to us) e.g. 130% of what we're giving.
So every trade multiplies the effective resource by e.g. 30%. Debt facilitates the trade, while simultaneously creating the value.
Up. to. a. point.
Without spoiling the ending that everyone knows is coming... crypto is not this. Crypto is not facilitating any (legal) economic activity. Nobody is taking this and buying machinery with a resource-generating payback period.
On the contrary, Tether DID take investor money (in the form of USD), provided them with an IOU, and proceeded to buy hopefully-productive "real"-economy bonds with it.
Debt only creates value if it can be repaid. If Tether can not maintain the peg, it represents insolvency, and a net loss for the investors (rather than a win-win as a loan is supposed to be).
Seeing they also own non-USD-denominated bonds, it is not guaranteed that the principal returned will be the same dollar amount, even if held until maturity.
https://www.cnbc.com/2022/05/19/tether-claims-usdt-stablecoi...
Debt only creates value if it can be repaid. If Tether can not maintain the peg, it represents insolvency, and a net loss for the investors (rather than a win-win as a loan is supposed to be).
Seeing they also own non-USD-denominated bonds, it is not guaranteed that the principal returned will be the same dollar amount, even if held until maturity.
https://www.cnbc.com/2022/05/19/tether-claims-usdt-stablecoi...
Great Example. Imagine if you gave me your oranges and I gave you a picture I drew of an orange and told you that this picture gives you the exclusive rights to all pictures of oranges in the world. That is a NFT.
If you think crypto is creative accounting, wait till you hear about fiat money.
Crypto is built around trust --- just like fiat.
Who do you trust more --- Binance/Bitfinex or Government?
The part you're missing is that individual and public interests arguably coincide with those of government more so than crypto exchanges.
Who do you trust more --- Binance/Bitfinex or Government?
The part you're missing is that individual and public interests arguably coincide with those of government more so than crypto exchanges.
As much as I would enjoy seeing it go to 0, nothing happened at the moment that didn’t happen at least 2 times already.
Wake me up when it’s below 95 cents
Wake me up when it’s below 95 cents
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Cool, i'm going to buy some cheap Tether before it goes back to being a dollar
USDT is at 98.4 cents now, so the upside is 1.6% (assuming USDT doesn't go over $1), and the downside is 100% if it goes to 0.
Tether is the big one. If Tether collapses it's going to take down Binance and probably every other exchange with it.
People have been warning about this for quite some time [1]. Tether is clearly under capitalized, and if you believe the worst rumors, was basically a perpetual motion machine being used to prop up Bitcoins price.
[1] https://coingeek.com/even-binance-thinks-the-tether-stableco...
People have been warning about this for quite some time [1]. Tether is clearly under capitalized, and if you believe the worst rumors, was basically a perpetual motion machine being used to prop up Bitcoins price.
[1] https://coingeek.com/even-binance-thinks-the-tether-stableco...
> Tether is the big one. If Tether collapses it's going to take down Binance and probably every other exchange with it.
Unlikely to bring down certain exchanges that actually keeps peoples currencies around and doesn't lend it out, or fuck around in other ways with peoples deposits. Coinbase comes to mind, where if everyone would take out their money and cryptocurrency ("bank-run"), everyone would likely end up actually getting their things out, although the company in that case would still be fucked.
Unlikely to bring down certain exchanges that actually keeps peoples currencies around and doesn't lend it out, or fuck around in other ways with peoples deposits. Coinbase comes to mind, where if everyone would take out their money and cryptocurrency ("bank-run"), everyone would likely end up actually getting their things out, although the company in that case would still be fucked.
Even if exchanges don't (on paper) loan on their capital, they still must have their USD somewhere, and that bank will surely be lending it out.
These exchanges are so big that a run on them would cause a run on the institutions they bank with, so you'd still get a liquidity squeeze somewhere, even with everyone acting with the best intentions.
And given recent history it's hard to know which exchanges haven't been loaning out their capital.
These exchanges are so big that a run on them would cause a run on the institutions they bank with, so you'd still get a liquidity squeeze somewhere, even with everyone acting with the best intentions.
And given recent history it's hard to know which exchanges haven't been loaning out their capital.
Granted, I don't have any insider information on how Coinbase actually deal with things, I'm only judging things by the public information they put out themselves. Also, I don't keep any funds at Coinbase myself, for whatever it's worth.
But this is what Coinbase themselves say:
> There can’t be a “run on the bank” at Coinbase. As you can review in our publicly filed, audited financial statements, we hold customer assets 1:1. Any institutional lending activity at Coinbase is at the discretion of the customer and backed by collateral. We have no gating for client loan recalls or withdrawals.
This is from https://www.coinbase.com/blog/our-approach-to-transparency-r...
But this is what Coinbase themselves say:
> There can’t be a “run on the bank” at Coinbase. As you can review in our publicly filed, audited financial statements, we hold customer assets 1:1. Any institutional lending activity at Coinbase is at the discretion of the customer and backed by collateral. We have no gating for client loan recalls or withdrawals.
This is from https://www.coinbase.com/blog/our-approach-to-transparency-r...
If their assets are not perfectly liquid (that is, not central bank money, and I'm not talking about “dollar” here, but deposit on a central bank account) then you're exposed to liquidity issue if there is a bank run. That's why the Fed has been created in the first place, to be the lender of last resort in adverse market conditions.
Liquidity problems aren't uncommon even for such super-safe assets as US treasuries. US is keen to address those ASAP and usually pumps in a lot of $$ to unblock the market if they see any issues with liquidity.
Without such interventions a run on treasuries would be a possibility. This would lead to cascading failures as they are used in leveraged bets far and wide, from hedge funds to pension funds.
Without such interventions a run on treasuries would be a possibility. This would lead to cascading failures as they are used in leveraged bets far and wide, from hedge funds to pension funds.
does it mostly help the bank run not end in a catastrophe or does it also helps alleviate a possible bank liquidity squeeze?
Binance holds $17.6B worth of USDT and $21.7B of its own stablecoin BUSD. So it would be an ugly picture for them if Tether depegged.
> $21.7B of its own stablecoin BUSD
You can't hold your own coin as an asset! This is what blew up FTX.
You can't hold your own coin as an asset! This is what blew up FTX.
FTX blew up because they used their own token (FTT) as a collateral, not because they were simple holding FTT. Binance doesn't use BUSD as a collateral, but of course they have a supply of their own token.
>but of course they have a supply of their own token
I don't get what's the point of holding your own stable coin except to potentially double the money they have?
Lets say they have $100M in cash(from wherever). Now they print 100M BUSD with the earlier $100M backing it up. Now they have $200M that they can borrow against?
I don't get what's the point of holding your own stable coin except to potentially double the money they have?
Lets say they have $100M in cash(from wherever). Now they print 100M BUSD with the earlier $100M backing it up. Now they have $200M that they can borrow against?
Imagine firms having their own stocks in their books (not for options grants but for themselves). That's complete insanity, but in crypto is just a random Thursday...
Wait, 25% of all tether is held by binance? That's a lot. How much is held by other players like bitfinex? Does the bank run need to involve a bank run on exchanges to crash USDT?
just to point out: banks are in practice a legalised Ponzi scheme
Kraken has proof of reserves, so it probably won't implode.
But sure, there's still too much leverage in the system probably.
But sure, there's still too much leverage in the system probably.
It's happening, isn't it?
No it is not. If USDT has survived till now it is unlikely to fall.
This is "thanksgiving turkey logic". That the turkey has been fed every day of its life until now is not proof that it will still be fed the day after thanksgiving. Similarly, currencies survives every crisis except their last one.
It has been quite forcefully tested throughout the year. It has barely showed any weakness yet we have been hearing USDT is on the brink for years now.
The story is getting old. Like a permabear seeing financial doom behind every corner.
The story is getting old. Like a permabear seeing financial doom behind every corner.
Folks act like my grandparents are gonna die, but I’m like “Bro, they’ve been at this game 90 years. I think they got this.”
That is an extremely bad take. Could have said the same about Luna, Celsius, 3AC, FTX, etc.
Everything survives until it falls. It only needs to fall once.
Would be a bigger collapse than FTX and Alameda.
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CMC is reporting $.9999, why?
https://coinmarketcap.com/
https://coinmarketcap.com/
Already back to peg.
Also, BTC dropped 5% today and recovered.
Also, BTC dropped 5% today and recovered.
Looks like they're pegging it up again.
If it goes down - the whole crypto movement and future optimism will be dead.
Stablecoins are the product of centralized human-managed financial engineering, they are not exactly what crypto proponents had in mind. They are convenient for some purposes, but everyone keeps in mind that they are not "real" crypto.
Proper degenst don't use USDT or FTX, they use DAI and Uniswap, and the latter two are doing fine.
No true ScotsCoin.
This reads like a rehash of the "not real communism" copy pasta from a few years back.
Bravo if its a deliberate homage
Bravo if its a deliberate homage
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It’s Luna all over again. Time to start the short positions
Imagine what will happen next year when the recession is continuing with more layoffs and higher sustained rates.
I really hope it gets destroyed, really plays with peoples hopes & dreams to get rich quick.
I really hope it gets destroyed, really plays with peoples hopes & dreams to get rich quick.
This is not a result of the wider recession directly. More a result of repeated, clear demonstration that the entire crypto "economy" is built on scams of one kind or another. FTX is the biggest yet and more people are realizing, rationally, they are no longer comfortable having significant money in crypto.
Correct. But in a bull run it will continue even more (like it has). While the recession should force it to explode instead of failing even later.
Black swan? Or just a white swan in a tar pit?
Tether collapsing would be the exact opposite of a black swan event.
Is there a good way to short tether? I think it's the trade of the century... the value basically cannot rise above $1. It looks like a ticking timebomb.
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Truly mesmerizing to watch. One can really see the hold points algos have given and changes in trading patterns, frequency as points are passed.
Can someone set up a notification to when the full meltdown really starts?
I'd pay real money to someone sending me an SMS with a URL in it to watch.
I'd pay real money to someone sending me an SMS with a URL in it to watch.
Why all these top posts about crypto on HN? Shouldn't really interest anyone, let the children play.
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How many USDT are printed so far?
By 2.5 usd cents?
That’s a huge deal for something that’s supposedly pegged.
If that were to happen to a traditional money market account it would be front page financial news.
If that were to happen to a traditional money market account it would be front page financial news.
Unless it goes below 0.92 USD (all time low of USDT, in 2017-2018, which it recovered from), I'm not sure it's as big deal as you make it sound like.
I would argue that means it’s not pegged (which is fine!). But people seem to think there is a peg on usdt and there isn’t, at least not as the term is used in traditional finance.
Going in with full naivety, assuming the company actually has enough USD to redeem every single USDT in existence, but it’s a slow, manual process only offered to big holders. Wouldn’t the peg still not always hold in a volatile situation, like the current one? All that’s required is enough people not trusting Tether Inc.
“it’s a slow, manual process only offered to big holders”
Is the most charitable reading you can give and I think it’s outside of peoples expectations of what a peg means.
I’m actually quite fine with tether having whatever redemption rules they want, but that is not the traditional definition you’d see with something like a money market. I would never say usdt is pegged to the dollar.
Is the most charitable reading you can give and I think it’s outside of peoples expectations of what a peg means.
I’m actually quite fine with tether having whatever redemption rules they want, but that is not the traditional definition you’d see with something like a money market. I would never say usdt is pegged to the dollar.
So instead of a peg [0], it’s kinda like a crawling peg [1], or an even better match, the linked exchange rate system in Hong Kong [2]
[0]: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system
[1]: https://en.wikipedia.org/wiki/Crawling_peg
[2]: https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in...
[0]: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system
[1]: https://en.wikipedia.org/wiki/Crawling_peg
[2]: https://en.wikipedia.org/wiki/Linked_exchange_rate_system_in...
It will go there. The ponzi will break sooner or later. The nice thing is, that the more it continues, the bigger the fall will be.
>The nice thing is, that the more it continues, the bigger the fall will be.
Why is that "nice"?
Why is that "nice"?
It's nicer than the alternative (to explode even later)
>The nice thing is, that the more it continues, the bigger the fall will be.
>It's nicer than the alternative (to explode even later)
These two outcomes are mutually exclusive. You're speaking nonsense.
>It's nicer than the alternative (to explode even later)
These two outcomes are mutually exclusive. You're speaking nonsense.
Both outcomes are nicer than the alternative (all crypto-bros become billionaire and everyone else staying poor and being enslaved)
Money market funds sometimes are priced above or below $1 due to market conditions. It’s rare but does happen.
If a large money market fund is priced 2.5% away from peg I suspect it is either a huge arbitrage opportunity that will get arbitraged in minutes if not seconds, or a strong signal that this fund is toast. Not an expert, would be happy to be refuted.
That's precisely how you would keep a peg: let the market enforce it and bear the brunt of the speculative action, then intervene brutally to restore the peg and reward those who held the line with profits. If you do it a few times, nobody will bet against the peg ever again.
Of course, this is all predicated on you actually having the massive assets required to fight a speculative market. That shouldn't be a problem for something like USDT which should be backed 1:1. So let's sit back and enjoy some price discovery (though I wouldn't be caught dead in USDT).
Of course, this is all predicated on you actually having the massive assets required to fight a speculative market. That shouldn't be a problem for something like USDT which should be backed 1:1. So let's sit back and enjoy some price discovery (though I wouldn't be caught dead in USDT).
Reminded of when the UK was unable to defend the stablepound against, er, Soros: https://www.investopedia.com/terms/b/black-wednesday.asp
> which should be backed
I think the major issue is that there seems to be a lot of evidence that it isn't.
I think the major issue is that there seems to be a lot of evidence that it isn't.
> That shouldn't be a problem for something like USDT which should be backed 1:1.
What if we all know it’s backed 1:1 by junk bonds?
What if we all know it’s backed 1:1 by junk bonds?
So the progression thus far as I see it has been:
* Every 1 USDT is backed by exactly 1 USD
* Ignore the haters, it's 1:1, we promise!
* Ok well it's 1:1 cash equivalents but that's just as good!
* Ok that includes commercial paper, but live a little! To the moooon!
* Ok so it's strayed a bit and now is not exactly backed 1:1, but it's only 2.5 cents out, come on that's barely anything
I wonder what the next stage will be.
* Every 1 USDT is backed by exactly 1 USD
* Ignore the haters, it's 1:1, we promise!
* Ok well it's 1:1 cash equivalents but that's just as good!
* Ok that includes commercial paper, but live a little! To the moooon!
* Ok so it's strayed a bit and now is not exactly backed 1:1, but it's only 2.5 cents out, come on that's barely anything
I wonder what the next stage will be.
Minute to minute peg breaks have nothing to do with backing. You might not believe tether is properly backed. That's fine. But let's not pretend this is connected...
That's big! Theoretically you can make a lot of money on the spread ("beware picking up pennies in front of a streamroller")
It can cause a bank run. Would you trust Tether or USD if you're uncertain?
98 cents is not a stable state for a stable coin. Either it gets back to $1 or is forced to liquidate at however much their assets fetch in a sale.
Ya how is possible? They supposed to have a 1 to 1 with collaterals to cover the valuation.
Well, is pretty obvious (and everybody knew it) that is not the case.
Well, is pretty obvious (and everybody knew it) that is not the case.
What do you mean? The market sets the price so it's not like it's magically fixed at 1. If it depegs it's because people lose confidence in it and don't trust the $1 value, but there's otherwise nothing special with it.
This can happen even if it's actually fully backed (which I doubt).
This can happen even if it's actually fully backed (which I doubt).
if you have a buyer (tether itself) that will always buy usdt at $1, then the price can fluctuate slightly in other exchanges but should always return to $1 since any fall in price becomes an arbitrage opportunity. you buy the 0.98 tether and sell back for $1, making 2 cents on the dollar. If the price keeps falling it’s because people don’t think they can get $1 from tether because they realize it’s actually worth $0. so you sell at the price you can get until the party is over. it’s not clear that this has happened yet, but it might, since tether has been extremely cagey about the assets it has backing usdt 1:1, so cagey you might suspect they are undecapitalized
Time matters too.
If I'm confident I can get $1000 for 1000 UDST but it will take on average a month, well, do you know what else is worth $1000 in a month? $996 at 5% APR. So 1 USDT == $0.996
If I'm confident I can get $1000 for 1000 UDST but it will take on average a month, well, do you know what else is worth $1000 in a month? $996 at 5% APR. So 1 USDT == $0.996
It's not even necessarily confidence (though there probably are also people who are freaking out). If people have their money in USDT and fear losing out on other action (e.g. if you believe there'll be a rebound after the big drop of a lot of the coins the other day), you may be prepared to take a loss to sell your USDT even if you have a 100% confidence that Tether will get it back under control.
You'd only need to believe - reasonably or not - that you could potentially increase your net return on betting on a rebound in another coin by more than the depeg.
That says nothing about whether or not those sentiments are reasonable, of course.
You'd only need to believe - reasonably or not - that you could potentially increase your net return on betting on a rebound in another coin by more than the depeg.
That says nothing about whether or not those sentiments are reasonable, of course.
Lol?
It's pegged because they have enough money to cover their evaluation!!!!
If tether is worth 100B in market cap, they must have 100B in assets (collaterals) to cover their evaluation!
It's not a sentiment what the hell are you talking about. Economics 101
If that's the case tomorrow someone can create a new token, say is 1-1 with USD, collect a few billions and run away?
It's pegged because they have enough money to cover their evaluation!!!!
If tether is worth 100B in market cap, they must have 100B in assets (collaterals) to cover their evaluation!
It's not a sentiment what the hell are you talking about. Economics 101
If that's the case tomorrow someone can create a new token, say is 1-1 with USD, collect a few billions and run away?
What exactly do you think you're looking at when clicking the post link? Their balance sheet?
Yes. Welcome to investment, that's how decisions are made: looking at balance sheets and boring numbers (collaterals/assets etc).
If a big investor is willing to sell enough of their tether at a lower price to affect the conversion rate (of a 70B currency), means they figured something that you didn't.
I don't know who's holding the majority of the tether and/or who's driving this discount but certainly they did the boring thing... Not looking at the *sentiment*
If a big investor is willing to sell enough of their tether at a lower price to affect the conversion rate (of a 70B currency), means they figured something that you didn't.
I don't know who's holding the majority of the tether and/or who's driving this discount but certainly they did the boring thing... Not looking at the *sentiment*
All it takes is for there to be low demand on one or more exchanges and for them to not quickly enough place buys to prop it up as people choose to sell lower rather than hold.
It could mean a great deal or not much at all, and doesn't really tell us anything about the proportion of collateral unless it depegs much more and they fail to get it under control.
It could mean a great deal or not much at all, and doesn't really tell us anything about the proportion of collateral unless it depegs much more and they fail to get it under control.
This doesn't indicate anything about the collateral, its a measure of sentiment and fear.
It's not! You crypto bros have no idea what are you talking about.
To have a currency pegged 1-1 with USD (or any other currency to that extent) you must have enough collaterals to support the evaluation
Otherwise if, collectively, people put 1 billion USD in tether and then want to get it back altogether how do you think they can do if there's not an asset behind to cover the valuation?
To have a currency pegged 1-1 with USD (or any other currency to that extent) you must have enough collaterals to support the evaluation
Otherwise if, collectively, people put 1 billion USD in tether and then want to get it back altogether how do you think they can do if there's not an asset behind to cover the valuation?
Are you being intentionally obtuse? Let me make it clear for you once and for all:
1. Tether claims they have collateral.
2. As long as the market thinks this is true it will be pegged to $1.
3. If the market stop believing they have collateral it will depeg from $1.
4. You don't need to have collateral to peg it. You just need to make the market think you have it.
6. Likewise it can depeg even if you actually have collateral if the market thinks you're lying.
1. Tether claims they have collateral.
2. As long as the market thinks this is true it will be pegged to $1.
3. If the market stop believing they have collateral it will depeg from $1.
4. You don't need to have collateral to peg it. You just need to make the market think you have it.
6. Likewise it can depeg even if you actually have collateral if the market thinks you're lying.
LOL, I've never invested in any crypto for the record. This is the secondary exchange it doesn't directly interact with bitfinex, someone would have to gobble up 100k USDT minimum to attempt to redeem at bitfinex.
Reserve Primary fund made history going to $0.97
Ah yes, that centralized thing that's maybe partially backed by a bunch of third-rate stuff that may or may not actually exist. Here we go again. I'm surprised it didn't happen earlier when the rest of the market was crashing though.
Don't forget about the transparency page [0]. It's all true! Trust me!
[0] https://tether.to/en/transparency/#reports
Don't forget about the transparency page [0]. It's all true! Trust me!
[0] https://tether.to/en/transparency/#reports
It has depegged before, like when LUNA crashed. During times of high uncertainty, it’s definitely worth 1-2% to get your money out. It remains to be seen if this current run will significantly impact Tether.
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