7 ms·
Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with
by comboy 6y ago
Many value increases are irrational, whatever that means, I understand how it can be used to pump the price. I just don't understand how it takes bitcoin with it when collapsing.
- quickthrower2 6y agoIf tether is pumping BTC then it’ll stop pumping BTC when it’s taken away. Weak hands will fold and then there will be a crash
- comboy 6y agoOK, yes, that's a fair point. But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC. Also we've been there (mtgox's willy etc). I don't think bitcoin will be much less volatile any time soon. https://www.youtube.com/watch?v=XbZ8zDpX2Mg https://www.youtube.com/watch?v=XbZ8zDpX2Mg
- leppr 6y agoPeople are not buying BTC to get out of USDT, they're buying other stablecoins and tokens pegged to real world assets. The last week has seen a surge in the price of those tokens compared to USDT. I've made good money arbitraging the bouts of panic.
- dragonwriter 6y ago> But it's not clear to me that pumping being taken away would be a bigger change than people trying to get out of USDT and buying BTC People trying to get out of USDT into BTC because the USDT:USD parity assumption collapses will boost BTC:USDT prices, but probably not enough to avoid dropping BTC:USD, because it would be less than the USDT:USD drop, is the idea.
- garmaine 6y agoHow would you sell USDT? You’d buy on a BTC/USDT market. These markets aren’t unified—there are different markets for tether and backed USD. Who would be counterparty to a tether exchange? Thise specific USDT pairings would crash. If they wanted USD (as they presumably do), they’d then crash the other stable coin or backed pairings.
- TomSwirly 6y agoBitcoin has no fundamental/breakup value and no market maker. In the same way that there's no obvious ceiling to its value, if a lot of people try to get out of it at once, there's no obvious floor either.
- yeneek 6y agoTether market cap is 24bil, Bitcoin market cap is 714bil. Its just 3%. I think that Tether isn't inflating BTC that much. The institutions that buy BTC like PayPal, Square, JPMorgan have much bigger effect on Bitcoin than Tether.
- yeneek 6y agoJackFr Fair point. Thank you. Well, it will be an interesting week for sure.
- JackFr 6y agoThat’s not quite how it’s gonna work. It doesn’t matter what the Tether market cap is. The BTC market cap is coins x price. If Tethers represent 70% of inflow and they disappear, price is gonna come down. Likely a lot more than 3%.
- ur-whale 6y agoThis is addressed in the article. Basically the market cap of BTC is not relevant here, but rather the daily volume.
- Bellamy 6y agoAnd from the 3% of tether, probably 74% is actually been backed.
- maxbond 6y agoTether will almost certainly collapse, and then you'll have a lot of bitcoin chasing very few dollars. There is likely to be a stampede for dollars, which becomes a vicious cycle deflating the price of Bitcoin - the liquidity is consumed (Bitfinex is printing Tether because there aren't enough dollars to go around at unbanked exchanges, afterall) at the same time the downward volatility dramatically increases the perception of Bitcoin's risk; market makers start heading for the door; the cost of liquidity becomes massive. There's some magic number for the price of Bitcoin, and it's hard to say what it is, where the miners start to lose money. If it stays too cheap for too long, it puts pressure on the miners to either switch to other coins or get out of the game entirely. Things could get very bad, very quick. The only reason I don't have a bearish position in Bitcoin is that I can't find a counterparty that a.) I can afford at my account size (eg not CME) and b.) that I'm confident will still be around after this crash. Stay cautious. Happy trading.
- leppr 6y agoThere are some Defi options on Ethereum that could allow you to short BTC with a USDC [1] collateral, like dYdX [2]. You would need to keep a small amount of ETH to operate the smart contracts, which could fluctuate in dollar value, but even after a black swan event, there's no reason that this decentralized infrastructure would not still be running, allowing you to redeem the USDC to real dollars. [1] Circle dollars, 1:1 backed stablecoin from a well regulated issuer. [2] https://trade.dydx.exchange/perpetual/BTC-USD https://trade.dydx.exchange/perpetual/BTC-USD
- maxbond 6y agoI appreciate the idea, but I neglected to mention (c) is legal in the US. Speculating on bubbles is just out of my league, and I'm okay with that.