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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 bec

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.

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.