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Tether's market cap is around $2b... the crypto market as a whole clocks in at over $500b right now... what kind of effect could Tether really have, beyond the

Tether's market cap is around $2b... the crypto market as a whole clocks in at over $500b right now... what kind of effect could Tether really have, beyond the inevitable panic that will ensue?

blhack 9y ago
So currently the same as: Bitcoin gold -- a questionable bitcoin fork. OmiseGo -- Soemthing I've actually never heard of, despite following cryptocurrencies pretty closely. If OmiseGo, or Bitcoin Gold ended up being a scam, would the market even notice?
nlowell 9y ago
Market cap is not the same as actual money that has flowed into the space. Tether claims that 2B actual USD exist in reserves.
- mattcaldwell 9y ago
  Actually, they claimed that they have "sufficient resources" to back the 2B.
thisisit 9y ago
The fallacy around marketcap is well explained the above post. Or check the link: https://news.ycombinator.com/item?id=16279591 https://news.ycombinator.com/item?id=16279591
- mattcaldwell 9y ago
  That doesn't actually apply here, does it? If $2B is an inflated market cap, that's good for everyone.
  - thisisit 9y ago
    The idea presented in the post is simple - marketcap is based on the last trade. So it is an unreliable indicator. True measure might be something like liqudity and exits. What happens if the liquidity shifts or exits to fiat disappear completely? Like I pointed out, currently USDT is connected to 15% of liquidity in BTC: https://news.ycombinator.com/item?id=16279642 https://news.ycombinator.com/item?id=16279642 Or as MekaiGS said the whole thing will depend on exits: https://news.ycombinator.com/item?id=16279618 https://news.ycombinator.com/item?id=16279618
    - mattcaldwell 9y ago
      I'll agree that the whole thing will depend on exits.
srdev 9y ago
Small amounts of money can have outsized effect on a market if it’s thinly traded, which crypto markets tend to be.
- josephagoss 9y ago
  Volume of trades from exchanges show that daily 5% of the market cap is traded. (About $25 billion traded vs $500 billion market cap) How does this compare to Apple or another large stock?
josephagoss 9y ago
Look at trade volume. Last time I checked tether was 10% of worldwide trade volume. That's huge. If this volume is based on fake dollars then I think the entire space could be massively inflated.
- mattcaldwell 9y ago
  That doesn't surprise me, since Bitfinex is using it as the base for their primary trading pair.
scott_s 9y ago
The world economy was much larger than the market for US mortgage bonds, but when US mortgage bonds failed, the entire world economy tanked. It's not about relative sizes, it's about how intertwined the relationships are.

Tether's market cap is around $2b... the crypto market as a whole clocks in at over $500b right now... what kind of effect could Tether really have, beyond the inevitable panic that will ensue?

blhack 9y ago

So currently the same as: Bitcoin gold -- a questionable bitcoin fork. OmiseGo -- Soemthing I've actually never heard of, despite following cryptocurrencies pretty closely. If OmiseGo, or Bitcoin Gold ended up being a scam, would the market even notice?

nlowell 9y ago

Market cap is not the same as actual money that has flowed into the space. Tether claims that 2B actual USD exist in reserves.

mattcaldwell 9y ago
Actually, they claimed that they have "sufficient resources" to back the 2B.

thisisit 9y ago

The fallacy around marketcap is well explained the above post. Or check the link: https://news.ycombinator.com/item?id=16279591 https://news.ycombinator.com/item?id=16279591

mattcaldwell 9y ago
That doesn't actually apply here, does it? If $2B is an inflated market cap, that's good for everyone.
- thisisit 9y ago
  The idea presented in the post is simple - marketcap is based on the last trade. So it is an unreliable indicator. True measure might be something like liqudity and exits. What happens if the liquidity shifts or exits to fiat disappear completely? Like I pointed out, currently USDT is connected to 15% of liquidity in BTC: https://news.ycombinator.com/item?id=16279642 https://news.ycombinator.com/item?id=16279642 Or as MekaiGS said the whole thing will depend on exits: https://news.ycombinator.com/item?id=16279618 https://news.ycombinator.com/item?id=16279618
  - mattcaldwell 9y ago
    I'll agree that the whole thing will depend on exits.

srdev 9y ago

Small amounts of money can have outsized effect on a market if it’s thinly traded, which crypto markets tend to be.

josephagoss 9y ago
Volume of trades from exchanges show that daily 5% of the market cap is traded. (About $25 billion traded vs $500 billion market cap) How does this compare to Apple or another large stock?

josephagoss 9y ago

Look at trade volume. Last time I checked tether was 10% of worldwide trade volume. That's huge. If this volume is based on fake dollars then I think the entire space could be massively inflated.

mattcaldwell 9y ago
That doesn't surprise me, since Bitfinex is using it as the base for their primary trading pair.

scott_s 9y ago

The world economy was much larger than the market for US mortgage bonds, but when US mortgage bonds failed, the entire world economy tanked. It's not about relative sizes, it's about how intertwined the relationships are.