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Given the recent news about Tether's solvency issues I wonder if this is not partially due to a "run" on Tether exchanges. Back in the day just before MtGox col

Given the recent news about Tether's solvency issues I wonder if this is not partially due to a "run" on Tether exchanges. Back in the day just before MtGox collapsed, when its solvency issues were obvious but it was not yet officially bankrupt, it experienced a run up in the price of BTC (due to BTC being the only means for people to withdraw value from the exchange) and this price increase "spilled over" to other (solvent) exchanges even though in a rational market it should not have.

chrononaut 7y ago
> I wonder if this is not partially due to a "run" in Tether exchanges Could this be something that's easily measured? e.g., I suppose in this case exchanges using Tether would have a larger than normal price for Bitcoin than usual, for a slightly longer amount of time, compared to the days preceding? I would be surprised if this information doesn't exist somewhere, and if many people weren't already looking at it for arbitrage purposes, but due to my unfamiliarity in this space I would have no idea where to find it.
- empath75 7y ago
  There was a several hundred dollar difference until like the last day or so.
Proven 7y ago
Probably the correct explanation. Ultimately those sought refuge in BTC will sell it. There's no new use case, there's nothing else that suddenly makes Bitcoin more viable than it was 10 days ago.
verroq 7y ago
It is rare that I read a HN comment that just get it completely, outright wrong. After the Tether news came out. USDT/USD dropped to around 0.97 which is around a 3% discount. The Bitcoin price on Bitfinex had an additional 4% premium, which is what the market has priced the exchange risk to be. [1] If people wanted to get out of Bitfinex, they had ample time to buy BTC and get out. They can also withdraw USDT to binance, and exchange for BTC on another USDT exchange, such as Binance. In fact, the price had been relatively flat for 5 days after Tether news. If you thought Tether or Bitfinex was insolvent, I doubt very much you'd wait 5 days to make your move. So in fact, this did not cause a run up. There is no reason why Tether being only 70% backed would cause "a run on Tether exchanges" (what does that sentence even mean?). The truth is, people don't really care if Tether is only 70% backed. Bitfinex makes enough money to cover the shortfall easily. The largest community of Tether holders are not westerners. They are Chinese, they hold USDT to get RMB out of China, they absolutely love Tether. Tether traded at a premium to USD before, during and after the USAG news came out on Chinese OTC exchanges. Bitfinex easily fundraised 1b USD from big Chinese players with the LEO token in about a week. The market had already decided that the Tether news as a nothingburger. After a slew of bad news "China mining ban", "Tether", "Binance hack", the price continued to run up. When a market discounts bad news like this, it means a fundamental shift occurred, the weak hands who did not believe in the core value of Bitcoin has exited the market and the market is free to move up. There is a lot of salt about Bitcoin on HN, many missed the run from $10 to $1k, many more missed the run from $200 to $20k, Bitcoin is at a cusp of a run from $3k to ??? and HN will tell you everything to not get on the train. [1] https://i.imgur.com/MC4obep.png https://i.imgur.com/MC4obep.png

chrononaut 7y ago

> I wonder if this is not partially due to a "run" in Tether exchanges Could this be something that's easily measured? e.g., I suppose in this case exchanges using Tether would have a larger than normal price for Bitcoin than usual, for a slightly longer amount of time, compared to the days preceding? I would be surprised if this information doesn't exist somewhere, and if many people weren't already looking at it for arbitrage purposes, but due to my unfamiliarity in this space I would have no idea where to find it.

empath75 7y ago
There was a several hundred dollar difference until like the last day or so.

Proven 7y ago

Probably the correct explanation. Ultimately those sought refuge in BTC will sell it. There's no new use case, there's nothing else that suddenly makes Bitcoin more viable than it was 10 days ago.

verroq 7y ago

It is rare that I read a HN comment that just get it completely, outright wrong. After the Tether news came out. USDT/USD dropped to around 0.97 which is around a 3% discount. The Bitcoin price on Bitfinex had an additional 4% premium, which is what the market has priced the exchange risk to be. [1] If people wanted to get out of Bitfinex, they had ample time to buy BTC and get out. They can also withdraw USDT to binance, and exchange for BTC on another USDT exchange, such as Binance. In fact, the price had been relatively flat for 5 days after Tether news. If you thought Tether or Bitfinex was insolvent, I doubt very much you'd wait 5 days to make your move. So in fact, this did not cause a run up. There is no reason why Tether being only 70% backed would cause "a run on Tether exchanges" (what does that sentence even mean?). The truth is, people don't really care if Tether is only 70% backed. Bitfinex makes enough money to cover the shortfall easily. The largest community of Tether holders are not westerners. They are Chinese, they hold USDT to get RMB out of China, they absolutely love Tether. Tether traded at a premium to USD before, during and after the USAG news came out on Chinese OTC exchanges. Bitfinex easily fundraised 1b USD from big Chinese players with the LEO token in about a week. The market had already decided that the Tether news as a nothingburger. After a slew of bad news "China mining ban", "Tether", "Binance hack", the price continued to run up. When a market discounts bad news like this, it means a fundamental shift occurred, the weak hands who did not believe in the core value of Bitcoin has exited the market and the market is free to move up. There is a lot of salt about Bitcoin on HN, many missed the run from $10 to $1k, many more missed the run from $200 to $20k, Bitcoin is at a cusp of a run from $3k to ??? and HN will tell you everything to not get on the train. [1] https://i.imgur.com/MC4obep.png https://i.imgur.com/MC4obep.png