5 ms·

I wonder what would happen if this proved to be scam. Would that kill the whole crypto market?

by josefrichter 5y ago

kebman 5y ago
People would want to get rid of Tether and fast. One way is to buy real money, like Bitcoin.
- deleted 5y ago
  [deleted]
Andrew_nenakhov 5y ago
I'll probably buy a few bitcoins at $100 price point then. Just in case it ever grows back.
- whiskyant 5y ago
  Even if it happened, I doubt it would drop lower than $10k.
- nanidin 5y ago
  You and thousands of other people, thereby preventing the Bitcoin price from ever likely reaching $100 in the first place. We’re living through an interesting piece of history here, that’s for sure.
aaronax 5y ago
Anyone holding Tether will be stuck selling it for the equivalent of $0.05 or whatever. This alone would have no effect on crypto prices. However, it will become harder to get various government-type currencies in to exchanges so presumably purchasing demand will fall, which seems like it would make crypto prices fall too.
- graeme 5y ago
  80% of crypto trades are against USDT
  - sabujp 5y ago
    why? a friend said it's because he doesn't have to pay tax, i corrected him last year. are people doing this because they really think they don't have to pay tax unless they swap to actual USDs? Or they're just hiding their USDs away from the IRS and other taxation entities?
    - jcranmer 5y ago
      It's suspected (not proven) that the majority of the trade is actually wash trading to pump the price of Bitcoin. Additionally, an exchange trading in USD will be exposed to US regulation as a result of that, even if not situated in the US--if you're trying to evade US financial regulations (or sanctions), you really don't want to touch any USD whatsoever.
    - graeme 5y ago
      The exchanges are able to buy USDT for less than $1 and use it to trade against customers. Big advantages to them to use it, and also they don’t need banking relationships to acquire it this way. FTX and Binance among biggest customers. Likely offering commercial paper to Tether in exchange for the USDT. Already established that Tether made crypto backed USDT loans to Celsius. Here’s Tether’s customers: https://protos.com/tether-papers-crypto-stablecoin-usdt-investigation-analysis/ https://protos.com/tether-papers-crypto-stablecoin-usdt-inve...
- josefrichter 5y ago
  That for sure. But I am more wondering about the collateral damage to other coins. Coz it would likely trigger sell off of many other coins to cover loses. On the other hand, the market cap is 75B, while ETH is 488B and BTC is 919B. So the impact maybe wouldn't be too drastic and too long lasting. I wonder if it's worth converting USDC and DAI loans to USDT, would be easier to repay if it did crash..
  - gadnuk 5y ago
    Market Cap != Liquidity 70% of the crypto volume is in USDT. From 2020 (should still hold): https://coingape.com/tether-dominates-exchange-trading-with-70-of-the-volume/ https://coingape.com/tether-dominates-exchange-trading-with-... If Tether collapses, so does USDT. If exchanges have majority of their volume in USDT pairs, then the market liquidity dries up and the whole thing collapse. Remember that those coins need to be cashed out for actual USD. But if that USD does not actually exist, what will you sell into?
- rglullis 5y ago
  Don't forget the amount of exchanges that can not trade USD so they rely on USDT to deal with BTC. Tether crashing is going to destroy the value of BTC and it will take all of the alts with it. It will make Mt Gox look like a hiccup. Still, it needs to happen. Keeping Tether alive is the worst thing that can happen to crypto.
  - rvz 5y ago
    > Still, it needs to happen. Keeping Tether alive is the worst thing that can happen to crypto. Exactly. The next big crypto crash is waiting to happen. Will probably come from the debt ceiling crisis with the US then cracking down on Tether afterwards with the US government also collecting unrealised capital gains taxes; enough to scare the hands out of lots of investors. Tether knows they are a scam. So they are getting out while they can.
whiskyant 5y ago
Kill? No. Temporarily crash? Probably.
Oberbaumbrucke 5y ago
The price of most/all crypto would fall dramatically. Tether is a huge component of the daily traded float in BTC. If tether was no longer accepted at $1, there's a lot less money chasing BTC. These markets wil be around forever, but much less attractive when people start to see past the Hype.
kebman 5y ago
Lots of people in here who don't understand neither Tether nor Bitcoin. The quickest way to get rid of Tether for most people, is to buy Bitcoin. The alternative would be to try to withdraw your Tether. Good luck with that during a crisis situation! Your best bet is thus still to buy Bitcoin, which would necessarily lead to a spike in its price. Then Bitcoin can be transferred to any exchange that deals in actual fiat currency, and sold from there, most likely with a nice profit to boot. Or do like the pros and just don't sell it ever, because that's actually safer than keeping your fiat these days, and especially if you're keeping it in mumbo-jumbo like Tether.
- josefrichter 5y ago
  Nobody “keeps” tether. Other than for having liquidity readily available. Your stance on Bitcoin is uncritically over optimistic, but if we stay in the confines of this topic, a tether crash would most likely make a significant dent on BTC. How big and how long would it take to recover, that’s a question. Might be days, might be years.
  - kebman 5y ago
    Please allow me to illustrate: Tether is used to buy Bitcoin and other cryptos. As you correctly observed. But: Tether ≠ Bitcoin. Tether FUD = get rid of Tether. The only thing that could dent Bitcoin, as in making it dip, would be if potential buyers withdrew Tether instead of doing the logical thing, which is to buy Bitcoin. The most likely outcome is that the “dent” results in a blow off top scenario, meaning that price would surge before a sell-off. As for “over optimistic;” people have been saying that since Bitcoin was a dollar, and possibly before that too.

I wonder what would happen if this proved to be scam. Would that kill the whole crypto market?

kebman 5y ago

People would want to get rid of Tether and fast. One way is to buy real money, like Bitcoin.

deleted 5y ago
[deleted]

Andrew_nenakhov 5y ago

I'll probably buy a few bitcoins at $100 price point then. Just in case it ever grows back.

whiskyant 5y ago
Even if it happened, I doubt it would drop lower than $10k.
nanidin 5y ago
You and thousands of other people, thereby preventing the Bitcoin price from ever likely reaching $100 in the first place. We’re living through an interesting piece of history here, that’s for sure.

aaronax 5y ago

Anyone holding Tether will be stuck selling it for the equivalent of $0.05 or whatever. This alone would have no effect on crypto prices. However, it will become harder to get various government-type currencies in to exchanges so presumably purchasing demand will fall, which seems like it would make crypto prices fall too.

graeme 5y ago
80% of crypto trades are against USDT
- sabujp 5y ago
  why? a friend said it's because he doesn't have to pay tax, i corrected him last year. are people doing this because they really think they don't have to pay tax unless they swap to actual USDs? Or they're just hiding their USDs away from the IRS and other taxation entities?
  - jcranmer 5y ago
    It's suspected (not proven) that the majority of the trade is actually wash trading to pump the price of Bitcoin. Additionally, an exchange trading in USD will be exposed to US regulation as a result of that, even if not situated in the US--if you're trying to evade US financial regulations (or sanctions), you really don't want to touch any USD whatsoever.
  - graeme 5y ago
    The exchanges are able to buy USDT for less than $1 and use it to trade against customers. Big advantages to them to use it, and also they don’t need banking relationships to acquire it this way. FTX and Binance among biggest customers. Likely offering commercial paper to Tether in exchange for the USDT. Already established that Tether made crypto backed USDT loans to Celsius. Here’s Tether’s customers: https://protos.com/tether-papers-crypto-stablecoin-usdt-investigation-analysis/ https://protos.com/tether-papers-crypto-stablecoin-usdt-inve...
josefrichter 5y ago
That for sure. But I am more wondering about the collateral damage to other coins. Coz it would likely trigger sell off of many other coins to cover loses. On the other hand, the market cap is 75B, while ETH is 488B and BTC is 919B. So the impact maybe wouldn't be too drastic and too long lasting. I wonder if it's worth converting USDC and DAI loans to USDT, would be easier to repay if it did crash..
- gadnuk 5y ago
  Market Cap != Liquidity 70% of the crypto volume is in USDT. From 2020 (should still hold): https://coingape.com/tether-dominates-exchange-trading-with-70-of-the-volume/ https://coingape.com/tether-dominates-exchange-trading-with-... If Tether collapses, so does USDT. If exchanges have majority of their volume in USDT pairs, then the market liquidity dries up and the whole thing collapse. Remember that those coins need to be cashed out for actual USD. But if that USD does not actually exist, what will you sell into?
rglullis 5y ago
Don't forget the amount of exchanges that can not trade USD so they rely on USDT to deal with BTC. Tether crashing is going to destroy the value of BTC and it will take all of the alts with it. It will make Mt Gox look like a hiccup. Still, it needs to happen. Keeping Tether alive is the worst thing that can happen to crypto.
- rvz 5y ago
  > Still, it needs to happen. Keeping Tether alive is the worst thing that can happen to crypto. Exactly. The next big crypto crash is waiting to happen. Will probably come from the debt ceiling crisis with the US then cracking down on Tether afterwards with the US government also collecting unrealised capital gains taxes; enough to scare the hands out of lots of investors. Tether knows they are a scam. So they are getting out while they can.

whiskyant 5y ago

Kill? No. Temporarily crash? Probably.

Oberbaumbrucke 5y ago

The price of most/all crypto would fall dramatically. Tether is a huge component of the daily traded float in BTC. If tether was no longer accepted at $1, there's a lot less money chasing BTC. These markets wil be around forever, but much less attractive when people start to see past the Hype.

kebman 5y ago

Lots of people in here who don't understand neither Tether nor Bitcoin. The quickest way to get rid of Tether for most people, is to buy Bitcoin. The alternative would be to try to withdraw your Tether. Good luck with that during a crisis situation! Your best bet is thus still to buy Bitcoin, which would necessarily lead to a spike in its price. Then Bitcoin can be transferred to any exchange that deals in actual fiat currency, and sold from there, most likely with a nice profit to boot. Or do like the pros and just don't sell it ever, because that's actually safer than keeping your fiat these days, and especially if you're keeping it in mumbo-jumbo like Tether.

josefrichter 5y ago
Nobody “keeps” tether. Other than for having liquidity readily available. Your stance on Bitcoin is uncritically over optimistic, but if we stay in the confines of this topic, a tether crash would most likely make a significant dent on BTC. How big and how long would it take to recover, that’s a question. Might be days, might be years.
- kebman 5y ago
  Please allow me to illustrate: Tether is used to buy Bitcoin and other cryptos. As you correctly observed. But: Tether ≠ Bitcoin. Tether FUD = get rid of Tether. The only thing that could dent Bitcoin, as in making it dip, would be if potential buyers withdrew Tether instead of doing the logical thing, which is to buy Bitcoin. The most likely outcome is that the “dent” results in a blow off top scenario, meaning that price would surge before a sell-off. As for “over optimistic;” people have been saying that since Bitcoin was a dollar, and possibly before that too.