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one thought bouncing among friends - if there's risk that Tether gets killed (e.g. by NYAG regulators), then it flees into BTC before the window shuts. True, it

by asah 6y ago

one thought bouncing among friends - if there's risk that Tether gets killed (e.g. by NYAG regulators), then it flees into BTC before the window shuts. True, it shuts down the (relatively small) spigot of Tether money printing, but BTC is mostly growing because of legit buying pressure coming from large institutions, e.g. Morgan Stanley buys 10% stake in Microstrategy (MSTR) for their BTC stake. WDYT?

dustingetz 6y ago
> (relatively small) Tether market cap is currently $24 billion and growing exponentially. BTC market cap is $700bn but that price is set on the margin by redditors buying $100 on a credit card, there is no depth to it. The Tether hypothesis is that ~all~ of the market cap of BTC is ultimately derived from thin marginal price on retail exchanges. You can't sell a billion of bitcoin for USD 1 billion, nobody has ever tried, there is not a buyer, and that's only .1% of the market cap. Any thin real cash in the ecosytem is exfiltrated by miners selling into retail to pay electricity bills. If Tether stops printing, retail stops buying, and there is no more cash for electric bills, network stops. This is both a game-over scenario for bitcoin as well as actually high likelyhood of happening due to action by US Government against Tether.
- alfl 6y ago
  This. I am interested in the court filings coming Jan 15.
alfl 6y ago
I have to see more data on this but my understanding is that Tether is already exiting to BTC and has been the single largest buyer for several weeks/months. Citation needed, this is a hypothesis that needs more evidentiary support for me to act on. Illiquid markets tend to be more price sensitive to the decisions of the marginal buyer. This is most visible, IMO, in real estate where wealthy marginal bidders move comparable prices en masse on low volume. Now let’s combine those ideas: if bitcoin is relatively illiquid and small group of wealthy buyers (banks, companies, other crypto assets) could issue treasury securities and roll the capital into BTC, what would we expect to see? I think we’d see a big price run in an otherwise low-growth broader market. This would tend to act as an M2 hedge for the early entrants and would be a very attractive move if their firm value was more or less “elastically attached” to the USD. Reminder: citation needed.

by asah 6y ago

dustingetz 6y ago

> (relatively small) Tether market cap is currently $24 billion and growing exponentially. BTC market cap is $700bn but that price is set on the margin by redditors buying $100 on a credit card, there is no depth to it. The Tether hypothesis is that ~all~ of the market cap of BTC is ultimately derived from thin marginal price on retail exchanges. You can't sell a billion of bitcoin for USD 1 billion, nobody has ever tried, there is not a buyer, and that's only .1% of the market cap. Any thin real cash in the ecosytem is exfiltrated by miners selling into retail to pay electricity bills. If Tether stops printing, retail stops buying, and there is no more cash for electric bills, network stops. This is both a game-over scenario for bitcoin as well as actually high likelyhood of happening due to action by US Government against Tether.

alfl 6y ago
This. I am interested in the court filings coming Jan 15.

alfl 6y ago

I have to see more data on this but my understanding is that Tether is already exiting to BTC and has been the single largest buyer for several weeks/months. Citation needed, this is a hypothesis that needs more evidentiary support for me to act on. Illiquid markets tend to be more price sensitive to the decisions of the marginal buyer. This is most visible, IMO, in real estate where wealthy marginal bidders move comparable prices en masse on low volume. Now let’s combine those ideas: if bitcoin is relatively illiquid and small group of wealthy buyers (banks, companies, other crypto assets) could issue treasury securities and roll the capital into BTC, what would we expect to see? I think we’d see a big price run in an otherwise low-growth broader market. This would tend to act as an M2 hedge for the early entrants and would be a very attractive move if their firm value was more or less “elastically attached” to the USD. Reminder: citation needed.