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Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? Or any other coin for that matter? Ha

Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? Or any other coin for that matter? Have you actually sat down and thought about this, even if 99% waited and cashed out over weeks, that 1% is still a huge injection into the ecosystem. People have been shown time and time again that the money is there, the peg can hold, the underlying company is also a cryptoexchange that can print cash simply by existing and all haters have left is attaching their ego to this notion and clinging to the dream of it going bankrupt over night. And the more they are wrong the more they desperately cling to this idea. Tether had $1B stolen from them when it was a significant % of their assets, along with the US govt taking other funds in the NYAG case and they easily survived, if not thrived. These comments/stories on HN have been here for years and they don't age well, it's hilarious to watch. You can all go short tether or bitcoin today for a fraction of a penny on the dollar, and yet, don't :/ Why not do it, you can hold a bitcoin future going short for the next year less than a coffee per / $1k, why not do that? Would surely make a great story.

soneca 6y ago
> ” you can hold a bitcoin future going short for the next year less than a coffee per / $1k” Genuinely curious about how could I do that. I am not that much into cryptocurrencies, so I appreciate if you have the time and will to be specific in the operationals. I do have a (currently empty) account at Kraken, if that helps. How can I short BTC?
- phyalow 6y ago
  Buy put options on deribit, or short USDT-BTC on FTX
  - musiciangames 6y ago
    Put options on deribit appear to settle in BTC, no? To short the ecosystem requires something that settles in USD
- wcoenen 6y ago
  Kraken has margin trading, which allows you to hold negative positions in BTC. However, this means you are borrowing the BTC that you're selling, and the interest on that is rather high (0.01% per 4 hours). You also need to keep EUR or USD as collateral in the account to cover potential losses when the price goes up.
dragonwriter 6y ago
> Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? If USDT:USD collapses, BTC:USDT will naturally go up, but it's also quite likely that BTC:USD (whether direct or indirect) will go down, to the extent it has been inflated by artificially inflated USDT:USD.
rmtech 6y ago
How do you short Tether?
- leppr 6y ago
  FTX exchange. Unavailable to US residents though.
leppr 6y ago
> Why not do it, you can hold a bitcoin future going short for the next year less than a coffee per / $1k, why not do that? Assuming you have enough collateral, you currently even get paid money to hold a short. As to your general point, I'd avoid holding the view that a 7 or so years old business can't fail as any kind of general truth. I know many smart people who are extremely bullish on cryptocurrencies, with huge investments. None of them think Tether will not fail one day. Everyone is playing the current market as a bubble.
furi 6y ago
If the scheme described by the article really exists, then it represents a substantial fraction of the demand for BTC. It's true that such a scheme collapsing would drive demand for BTC from USDT holders up. That's of course assuming they could still trade their USDT. Tether (the company) cancelled $30 million worth of coins stolen from them a few years back which suggests if the company was seized the ability to trade USDT could be disabled. But it's also true that such a scheme collapsing would instantly drive demand for BTC from Tether (the company) to zero. If that demand really is almost 70% of all the demand for BTC then BTC's price should decline significantly.
LittlePeter 6y ago
> Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? Or any other coin for that matter? Price in which terms? USD? USDT? Suppose it turns out tether is a fraud. What will happen? Tether holders will try to sell it for USD or Bitcoin. High supply of tether will lead to higher BTC/USDT and higher USD/USDT rate. Those who managed to convert tether to BTC will likely try to convert BTC into USD. This will lead to relative over-supply of BTC versus USD and BTC/USD will decrease.
gomox 6y ago
There's a very strong point to be made that shorts in a rigged market are not a good idea, because squeezing the shorts is easy for the money printers (who plausibly have visibility over the liquidation price points), whereas the odds of actually collecting in a black swan crash are slim to none.
- cocothp 6y ago
  I'm having a hard time wrapping my head around how squeezing Tether or Bitcoin would work in this case. Could you please explain?
  - gomox 6y ago
    Say you think Tether USD (USDT) is worthless and is being printed willy nilly to prop up the price of Bitcoin. As a corollary, you are basically forced to assume that large exchange owners are aware of this fact because quite simply there is no other way for fraud to happen at such a large scale without their knowledge, since exchanges KYC their customers and are aware of their balances and trade volumes. So you find an exchange that will allow you to short the BTC/USD (not USDT) pair and take a position. The liquidation price of your short is known to the exchange operators. If your position is large enough to create a problem for the whole scheme, the exchange owners can inform the Tether printers of your liquidation price, which they can use to squeeze you out, because they know exactly how high the price has to be to trigger your margin call.
tim333 6y ago
>short tether or bitcoin today for a fraction of a penny on the dollar I shorted tether one time, on Kraken, and it was horrendously expensive, like 25% per annum. Do you know where it can be done cheaply?
- leppr 6y ago
  https://ftx.com/en/trade/USDT-PERP https://ftx.com/en/trade/USDT-PERP Slightly positive predicted funding at the moment, which means you would get paid for shorting.
Tsotsi 6y ago
Even a short requires a counter party to fulfill! If market craters and the counter party to your short disappears, where are you going? The SEC? Finra? Honestly, you really have no idea.....

soneca 6y ago

> ” you can hold a bitcoin future going short for the next year less than a coffee per / $1k” Genuinely curious about how could I do that. I am not that much into cryptocurrencies, so I appreciate if you have the time and will to be specific in the operationals. I do have a (currently empty) account at Kraken, if that helps. How can I short BTC?

phyalow 6y ago
Buy put options on deribit, or short USDT-BTC on FTX
- musiciangames 6y ago
  Put options on deribit appear to settle in BTC, no? To short the ecosystem requires something that settles in USD
wcoenen 6y ago
Kraken has margin trading, which allows you to hold negative positions in BTC. However, this means you are borrowing the BTC that you're selling, and the interest on that is rather high (0.01% per 4 hours). You also need to keep EUR or USD as collateral in the account to cover potential losses when the price goes up.

dragonwriter 6y ago

> Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? If USDT:USD collapses, BTC:USDT will naturally go up, but it's also quite likely that BTC:USD (whether direct or indirect) will go down, to the extent it has been inflated by artificially inflated USDT:USD.

rmtech 6y ago

How do you short Tether?

leppr 6y ago
FTX exchange. Unavailable to US residents though.

leppr 6y ago

> Why not do it, you can hold a bitcoin future going short for the next year less than a coffee per / $1k, why not do that? Assuming you have enough collateral, you currently even get paid money to hold a short. As to your general point, I'd avoid holding the view that a 7 or so years old business can't fail as any kind of general truth. I know many smart people who are extremely bullish on cryptocurrencies, with huge investments. None of them think Tether will not fail one day. Everyone is playing the current market as a bubble.

furi 6y ago

If the scheme described by the article really exists, then it represents a substantial fraction of the demand for BTC. It's true that such a scheme collapsing would drive demand for BTC from USDT holders up. That's of course assuming they could still trade their USDT. Tether (the company) cancelled $30 million worth of coins stolen from them a few years back which suggests if the company was seized the ability to trade USDT could be disabled. But it's also true that such a scheme collapsing would instantly drive demand for BTC from Tether (the company) to zero. If that demand really is almost 70% of all the demand for BTC then BTC's price should decline significantly.

LittlePeter 6y ago

> Why on Earth would $100 billion worth of Tether rushing for a conversion into anything else drag _down_ the price of BTC? Or any other coin for that matter? Price in which terms? USD? USDT? Suppose it turns out tether is a fraud. What will happen? Tether holders will try to sell it for USD or Bitcoin. High supply of tether will lead to higher BTC/USDT and higher USD/USDT rate. Those who managed to convert tether to BTC will likely try to convert BTC into USD. This will lead to relative over-supply of BTC versus USD and BTC/USD will decrease.

gomox 6y ago

There's a very strong point to be made that shorts in a rigged market are not a good idea, because squeezing the shorts is easy for the money printers (who plausibly have visibility over the liquidation price points), whereas the odds of actually collecting in a black swan crash are slim to none.

cocothp 6y ago
I'm having a hard time wrapping my head around how squeezing Tether or Bitcoin would work in this case. Could you please explain?
- gomox 6y ago
  Say you think Tether USD (USDT) is worthless and is being printed willy nilly to prop up the price of Bitcoin. As a corollary, you are basically forced to assume that large exchange owners are aware of this fact because quite simply there is no other way for fraud to happen at such a large scale without their knowledge, since exchanges KYC their customers and are aware of their balances and trade volumes. So you find an exchange that will allow you to short the BTC/USD (not USDT) pair and take a position. The liquidation price of your short is known to the exchange operators. If your position is large enough to create a problem for the whole scheme, the exchange owners can inform the Tether printers of your liquidation price, which they can use to squeeze you out, because they know exactly how high the price has to be to trigger your margin call.

tim333 6y ago

>short tether or bitcoin today for a fraction of a penny on the dollar I shorted tether one time, on Kraken, and it was horrendously expensive, like 25% per annum. Do you know where it can be done cheaply?

leppr 6y ago
https://ftx.com/en/trade/USDT-PERP https://ftx.com/en/trade/USDT-PERP Slightly positive predicted funding at the moment, which means you would get paid for shorting.

Tsotsi 6y ago

Even a short requires a counter party to fulfill! If market craters and the counter party to your short disappears, where are you going? The SEC? Finra? Honestly, you really have no idea.....