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> will likely take the whole crypto market with it. I often see this repeated on HN, but this is never explained. Why will the collapse of Thether impact the w

> will likely take the whole crypto market with it. I often see this repeated on HN, but this is never explained. Why will the collapse of Thether impact the whole crypto market?

dcolkitt 5y ago
If anything, it would most likely create substantial buying pressure in BTC or ETH in the short term. The whole reason people hold Tether is because they’re in an ecosystem where they can’t easily access dollars directly. Say you’re on a crypto only exchange, like BitMEX, or on blockchain. What are your exit options? You can’t buy USD on Uniswap, only stablecoins. In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum.
- paulgb 5y ago
  > In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum. I’m sure there would be a lot of people who would like to trade their Tethers for Bitcoin in the event of a collapse, but who is going to sell it to them?
  - deleted 5y ago
    [deleted]
  - tgsovlerkhgsel 5y ago
    Someone who thinks that they can recover 10% of the nominal value may be willing to sell BTC for Tether, at a price 10x as high as the actual-USD Bitcoin price.
- deleted 5y ago
  [deleted]
- jkhdigital 5y ago
  Yup, flight to safety in crypto means buying BTC. Nobody needs Tether—you can get into and out of nearly any fiat currency from BTC directly.
  - quickthrowman 5y ago
    One problem: nobody with BTC will want to trade it for tether if tether collapses, I bet even the market makers would stop exchanging BTC a for tether.
    - jkepler 5y ago
      Right. But problems with Tether don't affect bitcoin. People who want dollar-pegged digital currencies can hold other USDx tokens, including DAI, which is all provably based on over-collateralized (minimum 150%) debt obligations in a decentralized system.
- LarryEt 5y ago
  Absurd. It is like saying the collapse of Lehman Brothers would be good for other bank stocks. When Tether implodes the entire space will deleverage.
  - dcolkitt 5y ago
    No, it's more like saying that a downgrade in America's AAA debt rating would lead to a rally in price of the US dollar and Treasury Bonds. (Which is exactly what happened in 2011.) It doesn't make any sense from a fundamentals standpoint, but when somebody "sells" something they have to "buy" something else. In 2011, the flight to quality led people to hold bonds and dollars, even though those were the exact assets being downgraded. If/when Tether ever falls apart, it's a question of what will the average user "buy" when they "sell" their Tether. The answer to that is almost certainly not fiat dollars in the normal banking system, because the whole reason people use Tether is because they can't easily access the banking system. So the only real asset they can trade Tether into is other major crypto. Like BTC or ETH.
    - ProjectArcturis 5y ago
      No, Tether can simply become worthless. Take the extreme case where Tether's backing organization does an exit scam and there are no assets at all behind it. Anyone who has Tether has simply lost that money; they don't get to sell it and buy something else.
TheAlchemist 5y ago
My theory is, that they are mostly not backed by real USD nor assets - it's virtually impossible that they have so much commercial paper without nobody in the business even knowing them. They are most probably lying. If this is true, and everything points to it, then there is simply much less real USD on the exchanges than people think. People often quote the crypto market cap and that Tether only represents 5-10% of it - but most BTC were never really available anyway - they were never bought or traded on any exchange. So the total inflow of USD (or any other real money) is much less than crypto market cap - and a lot of it was eaten by miners, arbitrageurs and exchange fees. When the music stops - and enough people try to get their real money from the exchanges, it simply won't be there.
- jkepler 5y ago
  Real money = bitcoin, so yes, if people leave their bitcoin keys on the exchanges, they'll loose real money. Not your keys, not your coins.
  - TheAlchemist 5y ago
    No. By real money I mean fait currencies
lou1306 5y ago
People love using Tether to purchare BTC (and other cryptovalues). > over two-thirds of all Bitcoin — $10 billion worth of it — that was bought in the previous 24 hours, was being purchased with Tethers. [0] Thus, it is not unreasonable to say the 1 Tether = 1 USD change indirectly affects (read: inflates) the valuation of BTC, and that a depreciation of Tether may have an impact on BTC. [0] https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3 https://crypto-anonymous-2021.medium.com/the-bit-short-insid...
fbernier 5y ago
Have you looked at market-wide charts when I Bitcoin is having a bad day? All the others are red too. Bitcoin's price is currently artificially inflafed by all the tether printing. It'll go down with it, and so will the rest of cryptko.
fbernier 5y ago
Have you looked at market-wide charts when I Bitcoin is having a bad day? All the others are red too. Bitcoin's price is currently artificially inflafed by all the tether printing. It'll go down with it, and so will the rest of crypto.

> will likely take the whole crypto market with it. I often see this repeated on HN, but this is never explained. Why will the collapse of Thether impact the whole crypto market?

dcolkitt 5y ago

If anything, it would most likely create substantial buying pressure in BTC or ETH in the short term. The whole reason people hold Tether is because they’re in an ecosystem where they can’t easily access dollars directly. Say you’re on a crypto only exchange, like BitMEX, or on blockchain. What are your exit options? You can’t buy USD on Uniswap, only stablecoins. In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum.

paulgb 5y ago
> In this case “panic-selling” Tether means a massive rush into Bitcoin and Ethereum. I’m sure there would be a lot of people who would like to trade their Tethers for Bitcoin in the event of a collapse, but who is going to sell it to them?
- deleted 5y ago
  [deleted]
- tgsovlerkhgsel 5y ago
  Someone who thinks that they can recover 10% of the nominal value may be willing to sell BTC for Tether, at a price 10x as high as the actual-USD Bitcoin price.
deleted 5y ago
[deleted]
jkhdigital 5y ago
Yup, flight to safety in crypto means buying BTC. Nobody needs Tether—you can get into and out of nearly any fiat currency from BTC directly.
- quickthrowman 5y ago
  One problem: nobody with BTC will want to trade it for tether if tether collapses, I bet even the market makers would stop exchanging BTC a for tether.
  - jkepler 5y ago
    Right. But problems with Tether don't affect bitcoin. People who want dollar-pegged digital currencies can hold other USDx tokens, including DAI, which is all provably based on over-collateralized (minimum 150%) debt obligations in a decentralized system.
LarryEt 5y ago
Absurd. It is like saying the collapse of Lehman Brothers would be good for other bank stocks. When Tether implodes the entire space will deleverage.
- dcolkitt 5y ago
  No, it's more like saying that a downgrade in America's AAA debt rating would lead to a rally in price of the US dollar and Treasury Bonds. (Which is exactly what happened in 2011.) It doesn't make any sense from a fundamentals standpoint, but when somebody "sells" something they have to "buy" something else. In 2011, the flight to quality led people to hold bonds and dollars, even though those were the exact assets being downgraded. If/when Tether ever falls apart, it's a question of what will the average user "buy" when they "sell" their Tether. The answer to that is almost certainly not fiat dollars in the normal banking system, because the whole reason people use Tether is because they can't easily access the banking system. So the only real asset they can trade Tether into is other major crypto. Like BTC or ETH.
  - ProjectArcturis 5y ago
    No, Tether can simply become worthless. Take the extreme case where Tether's backing organization does an exit scam and there are no assets at all behind it. Anyone who has Tether has simply lost that money; they don't get to sell it and buy something else.

TheAlchemist 5y ago

My theory is, that they are mostly not backed by real USD nor assets - it's virtually impossible that they have so much commercial paper without nobody in the business even knowing them. They are most probably lying. If this is true, and everything points to it, then there is simply much less real USD on the exchanges than people think. People often quote the crypto market cap and that Tether only represents 5-10% of it - but most BTC were never really available anyway - they were never bought or traded on any exchange. So the total inflow of USD (or any other real money) is much less than crypto market cap - and a lot of it was eaten by miners, arbitrageurs and exchange fees. When the music stops - and enough people try to get their real money from the exchanges, it simply won't be there.

jkepler 5y ago
Real money = bitcoin, so yes, if people leave their bitcoin keys on the exchanges, they'll loose real money. Not your keys, not your coins.
- TheAlchemist 5y ago
  No. By real money I mean fait currencies

lou1306 5y ago

People love using Tether to purchare BTC (and other cryptovalues). > over two-thirds of all Bitcoin — $10 billion worth of it — that was bought in the previous 24 hours, was being purchased with Tethers. [0] Thus, it is not unreasonable to say the 1 Tether = 1 USD change indirectly affects (read: inflates) the valuation of BTC, and that a depreciation of Tether may have an impact on BTC. [0] https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3 https://crypto-anonymous-2021.medium.com/the-bit-short-insid...

fbernier 5y ago

Have you looked at market-wide charts when I Bitcoin is having a bad day? All the others are red too. Bitcoin's price is currently artificially inflafed by all the tether printing. It'll go down with it, and so will the rest of cryptko.

fbernier 5y ago