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> Why wouldn't people sell? Tether could be intervening in the markets and propping it up with reserves, similar to how banks prop up a stock for a while after
by dclusin 7y ago
> Why wouldn't people sell?
Tether could be intervening in the markets and propping it up with reserves, similar to how banks prop up a stock for a while after IPO.
Or it could be that Tether market is still irrational. Everyone in the crypto space really wants
a stablecoin that trades for a dollar. The number of people who trade and desire to have such a coin could outnumber the more rational market participants who say it's worthless.
- Scoundreller 7y agoExactly. That’s how pegs are maintained. If Tether has full reserves, it makes sense for them to maintain the peg: buy Tethers at a 1%+ discount and cancel them ad nauseum. I’m sure some desperate holders would even take a 10% haircut right now. This is no different than a corporation’s treasury buying back its own stock and cancelling it.
- repomies68 7y agoFull reserves aren't required to maintain the peg, fractional reserves can work as well. However with fractional reserves there is a risk that the backer might lose money.