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I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dolla

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

simik 9y ago
Yep, zoom out a bit more and this recent dip is not that bad. https://cryptowat.ch/kraken/usdtusd/1d https://cryptowat.ch/kraken/usdtusd/1d But still, I'm a skeptic too.
digianarchist 9y ago
That's still approx a $44 million loss on their market cap.
- crypt1d 9y ago
  which is really just a drop in the bucket compared to the daily crypto market oscillations.
empath75 9y ago
At one point a few hours ago, the buy side of the depth chart was so weak that a million usdt sell order would have dropped the price to a penny.
mtgx 9y ago
Which makes the article and especially the title fake news. Tether deviated by 10 cents last May, and then it quickly recovered. Tether may have its issues, but this move alone tells us absolutely nothing. Saying that Tether is dying because of this move alone is absolute nonsense. Such deviations can happen when one or a few whales take out their tens of millions of dollars out of Tether, or put their cryptocurrencies into Tether (that's when it rises by 5-10 cents).
- brokensegue 9y ago
  no. "fake news" does not mean just wrong news or bad analysis. that meaning is a co-option of the term which was meant to refer to whole-cloth fabricated stories or hoaxes often meant to bias.
hidenotslide 9y ago
Either tether is trading at a discount due to liquidity issues like a closed-end fund or due to real credit issues (fraud).
- brokensegue 9y ago
  well it's the former? right?
  - hidenotslide 9y ago
    I have no clue, you'd have to ask people who sell below par. If they are selling because they can't access the normal withdrawal mechanism (e.g. US customers or people in a rush relative to processing delays) then it is the former. If they are speculatively shorting it is more likely the latter. It could be both: people who can't do normal withdrawal and think there is at least 2% chance of fraud.
    - brokensegue 9y ago
      there is no normal withdrawal mechanism.
      - deleted 9y ago
        [deleted]
      - hidenotslide 9y ago
        I don't know the details. Multiple places seem to imply there is at least some planned mechanism, that's all I was referring to. E.g. from the white paper: "Tethers may be redeemable/exchangeable for the underlying fiat currency pursuant to Tether Limited’s terms of service". I don't have a position here and no axe to grind, but parting from your auditors is in many cases a significant red flag.
        mcintyre1994 9y ago
        They have Web pages for buying tethers/selling them, but they're always closed and just say contact them if you're a $x million investor. So the claim is presumably that the billions of tethers printed are all backed by institutional investors. I just had a look at the site now and the registration system is apparently being rebuilt, so there's no path to buy/sell through them today.
ahelwer 9y ago
Also a skeptic: this author doesn't know what they're talking about. "Turning on the printing presses" to defend the USDT/USD price? What? No, the opposite: Tether would have to be buying USDT with USD then destroying it. There remains the possibility that Tether doesn't need to have the money in reserve (or not 100%, anyway). It can just conduct open-market operations to maintain parity: printing & selling Tether when USDT/USD is above parity, and buying & destroying Tether when it is below. This could even make for a very nice business model, as explained in this blog post: https://kevinlawler.com/tether https://kevinlawler.com/tether Of course, the conclusion that Tether will stay solvent from profit motive does not concord with history: FDIC came around for a reason, and that reason was 30% of all banks started in the US ended in insolvency. Plus, there are obvious parallels with Black Wednesday: https://en.wikipedia.org/wiki/Black_Wednesday https://en.wikipedia.org/wiki/Black_Wednesday You can even short Tether on Kraken, although then you have to worry about counter-party risk through exchange insolvency.
- SwellJoe 9y ago
  I think the idea is that when Tether turns up the printing press, they are using it to buy Bitcoin, which they can then use to buy USD, which can then be used to buy back some of the USDT on Kraken. The assumption is that there isn't enough USD cash in reserve to actually buy back the Tethers on Kraken (and anywhere else it may be flagging). Since they have no banks (as far as anyone can tell), and it's very difficult to imagine how hundreds of millions of USD is flowing into Tether from institutional investors, I can't figure out how they'd have $2+ billion USD just hanging around. As with any great Ponzi scheme, you have to pay some of your early investors to keep the thing going. But, at some point, you risk eating into your profits, so you just stop and everything collapses while you disappear to the island you bought with your stolen money. If they want to keep going, they have to buy some USDT on Kraken to prop up the price. But, if they're done with the con and want to cash out...now might be when they do it. A few hundred million worth of various crypto assets is not a bad take.
  - hedonistbot 9y ago
    They should already own a ton of bitcoin and someone speculated in a previous thread that their reserves are actually in bitcoin, which would make a lot of sense. The problem here is that every time someone redeems their tether for real dollars, Tether (the company) have to sell part of their reserves and this brings bitcoin price down, in effect dwindling their reserve pool. If there are enough bitcoin buyers or there aren't many people redeeming their tethers for dollars, they should be fine. However, if people lose faith in tether (the coin) then mass redemption will crash bitcoin prices (judging by the daily volumes of tether trading) and there won't be enough reserves to cover everyone at par with the dollar. Hence the pyramid scheme allegations. This is all assuming they don't hold $2+ bn cash in reserves.

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

simik 9y ago

Yep, zoom out a bit more and this recent dip is not that bad. https://cryptowat.ch/kraken/usdtusd/1d https://cryptowat.ch/kraken/usdtusd/1d But still, I'm a skeptic too.

digianarchist 9y ago

That's still approx a $44 million loss on their market cap.

crypt1d 9y ago
which is really just a drop in the bucket compared to the daily crypto market oscillations.

empath75 9y ago

At one point a few hours ago, the buy side of the depth chart was so weak that a million usdt sell order would have dropped the price to a penny.

mtgx 9y ago

Which makes the article and especially the title fake news. Tether deviated by 10 cents last May, and then it quickly recovered. Tether may have its issues, but this move alone tells us absolutely nothing. Saying that Tether is dying because of this move alone is absolute nonsense. Such deviations can happen when one or a few whales take out their tens of millions of dollars out of Tether, or put their cryptocurrencies into Tether (that's when it rises by 5-10 cents).

brokensegue 9y ago
no. "fake news" does not mean just wrong news or bad analysis. that meaning is a co-option of the term which was meant to refer to whole-cloth fabricated stories or hoaxes often meant to bias.

hidenotslide 9y ago

Either tether is trading at a discount due to liquidity issues like a closed-end fund or due to real credit issues (fraud).

brokensegue 9y ago
well it's the former? right?
- hidenotslide 9y ago
  I have no clue, you'd have to ask people who sell below par. If they are selling because they can't access the normal withdrawal mechanism (e.g. US customers or people in a rush relative to processing delays) then it is the former. If they are speculatively shorting it is more likely the latter. It could be both: people who can't do normal withdrawal and think there is at least 2% chance of fraud.
  - brokensegue 9y ago
    there is no normal withdrawal mechanism.
    - deleted 9y ago
      [deleted]
    - hidenotslide 9y ago
      I don't know the details. Multiple places seem to imply there is at least some planned mechanism, that's all I was referring to. E.g. from the white paper: "Tethers may be redeemable/exchangeable for the underlying fiat currency pursuant to Tether Limited’s terms of service". I don't have a position here and no axe to grind, but parting from your auditors is in many cases a significant red flag.
      - mcintyre1994 9y ago
        They have Web pages for buying tethers/selling them, but they're always closed and just say contact them if you're a $x million investor. So the claim is presumably that the billions of tethers printed are all backed by institutional investors. I just had a look at the site now and the registration system is apparently being rebuilt, so there's no path to buy/sell through them today.

ahelwer 9y ago

Also a skeptic: this author doesn't know what they're talking about. "Turning on the printing presses" to defend the USDT/USD price? What? No, the opposite: Tether would have to be buying USDT with USD then destroying it. There remains the possibility that Tether doesn't need to have the money in reserve (or not 100%, anyway). It can just conduct open-market operations to maintain parity: printing & selling Tether when USDT/USD is above parity, and buying & destroying Tether when it is below. This could even make for a very nice business model, as explained in this blog post: https://kevinlawler.com/tether https://kevinlawler.com/tether Of course, the conclusion that Tether will stay solvent from profit motive does not concord with history: FDIC came around for a reason, and that reason was 30% of all banks started in the US ended in insolvency. Plus, there are obvious parallels with Black Wednesday: https://en.wikipedia.org/wiki/Black_Wednesday https://en.wikipedia.org/wiki/Black_Wednesday You can even short Tether on Kraken, although then you have to worry about counter-party risk through exchange insolvency.

SwellJoe 9y ago
I think the idea is that when Tether turns up the printing press, they are using it to buy Bitcoin, which they can then use to buy USD, which can then be used to buy back some of the USDT on Kraken. The assumption is that there isn't enough USD cash in reserve to actually buy back the Tethers on Kraken (and anywhere else it may be flagging). Since they have no banks (as far as anyone can tell), and it's very difficult to imagine how hundreds of millions of USD is flowing into Tether from institutional investors, I can't figure out how they'd have $2+ billion USD just hanging around. As with any great Ponzi scheme, you have to pay some of your early investors to keep the thing going. But, at some point, you risk eating into your profits, so you just stop and everything collapses while you disappear to the island you bought with your stolen money. If they want to keep going, they have to buy some USDT on Kraken to prop up the price. But, if they're done with the con and want to cash out...now might be when they do it. A few hundred million worth of various crypto assets is not a bad take.
- hedonistbot 9y ago
  They should already own a ton of bitcoin and someone speculated in a previous thread that their reserves are actually in bitcoin, which would make a lot of sense. The problem here is that every time someone redeems their tether for real dollars, Tether (the company) have to sell part of their reserves and this brings bitcoin price down, in effect dwindling their reserve pool. If there are enough bitcoin buyers or there aren't many people redeeming their tethers for dollars, they should be fine. However, if people lose faith in tether (the coin) then mass redemption will crash bitcoin prices (judging by the daily volumes of tether trading) and there won't be enough reserves to cover everyone at par with the dollar. Hence the pyramid scheme allegations. This is all assuming they don't hold $2+ bn cash in reserves.