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Anything on any market can shift its price to the red or green. Tether and USDC are just tokens, so if there is enough sell pressure and not enough liquidity, t

Anything on any market can shift its price to the red or green. Tether and USDC are just tokens, so if there is enough sell pressure and not enough liquidity, the price on an exchange can jump to something else than $1. They are not fixed at a static $1. It's actually almost never exactly at $1 and the reason why it's immediately pegging back to $1 is because there is an arbitrage opportunity, assuming there is enough backing so that in the worst case the custodian would just buy back the tokens for exactly $1, no matter what the market price is. Seeing USDT at 0.97 temporarily doesn't mean much more than there is an insane amount of money exiting right now. One exchange can quickly fall to something like 0.97 if there is not enough buy power closer to $1

NavinF 4y ago
> Seeing USDT at 0.97 temporarily doesn't mean much more than there is an insane amount of money exiting right now Eh you might be right, but there are orders executing at 0.95 now. Will you buy in for a “free” 6% ROI? I was planning on buying a couple of GPUs, but now I think I should wait a bit just in case ETH crashes lol Edit: Yeah you should have put your money where your mouth is. It’s back up to 0.988.
- Nursie 4y ago
  > just in case ETH crashes lol Down about 20% in the last 24 hours so ... is that a crash?
  - NavinF 4y ago
    Nope, that’s pretty normal given how volatile ETH can be. But with another 20% drop, we might see retail prices for GPUs: https://www.metaculus.com/questions/9561/end-of-the-gpu-shortage/ https://www.metaculus.com/questions/9561/end-of-the-gpu-shor... Either way I don’t wanna buy in before a potential dip :)
- xur17 4y ago
  > I was planning on buying a couple of GPUs, but now I think I should wait a bit just in case ETH crashes lol If you're willing to wait a few more months, I'd definitely wait. Regardless of a price drop, there should be a demand drop due to the transition to PoS.
ezzaf 4y ago
The whole point of a stablecoin however is that it is supposed to be... stable. From tether.to: "Tether tokens are referred to as stablecoins because they offer price stability as they are pegged to a fiat currency. This offers traders, merchants and funds a low volatility solution when exiting positions in the market. All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD)" $0.95 is not $1.00 and a 5% drop is not low volatility.
- eudoxus 4y ago
  "when exiting positions in the market" this statement applies only if you exit using tether.io. You can always (if they have the cash on hand) swap 1 USDT for 1 USD. They can't make that guarantee for <insert random exchange order book>. The reason it stays "mostly" at $1 on exchanges is because arbitragers are incentivized to do so. But again, 1USDT is ALWAYS 1USD on tether.io. So yes, the statement you quoted is accurate.
  - hhmc 4y ago
    > But again, 1USDT is ALWAYS 1USD on tether.io. Until you can't redeem and 1USDT is 0USD on tether.io. The price on a 'random orderbook' is reflecting this risk.
    - eudoxus 4y ago
      > You can always (if they have the cash on hand) swap 1 USDT for 1 USD Exactly, until you can't as I outlined. The price on a randombook is a function of many things, including "percieved" risk. Its also a function of liquidity/depth and the willingness to exit fast, ignoring the 1-3% fee. Everyone and their grandfather knows tether doesn't have 1:1 asset reserves for their $80B market cap. But noone knows how much they do have and how long they can keep up the charade.
  - ThePhysicist 4y ago
    Redeeming Tether via the official route takes several days as I understand (in the current situation probably more like several weeks?). So if you're a large investor you have the choice of either trusting Tether to be able to make good on the promised redemption, not knowing if it will be the case for days or weeks, or you can just go to the market and sell your Tether there at a 2 % loss. As an investor I'd always go for the second route as there's large downside risk and almost no upside potential when redeeming via tether.to. No sane investor would risk losing 100 % of their assets to escape a 2 % haircut.

NavinF 4y ago

> Seeing USDT at 0.97 temporarily doesn't mean much more than there is an insane amount of money exiting right now Eh you might be right, but there are orders executing at 0.95 now. Will you buy in for a “free” 6% ROI? I was planning on buying a couple of GPUs, but now I think I should wait a bit just in case ETH crashes lol Edit: Yeah you should have put your money where your mouth is. It’s back up to 0.988.

Nursie 4y ago
> just in case ETH crashes lol Down about 20% in the last 24 hours so ... is that a crash?
- NavinF 4y ago
  Nope, that’s pretty normal given how volatile ETH can be. But with another 20% drop, we might see retail prices for GPUs: https://www.metaculus.com/questions/9561/end-of-the-gpu-shortage/ https://www.metaculus.com/questions/9561/end-of-the-gpu-shor... Either way I don’t wanna buy in before a potential dip :)
xur17 4y ago
> I was planning on buying a couple of GPUs, but now I think I should wait a bit just in case ETH crashes lol If you're willing to wait a few more months, I'd definitely wait. Regardless of a price drop, there should be a demand drop due to the transition to PoS.

ezzaf 4y ago

The whole point of a stablecoin however is that it is supposed to be... stable. From tether.to: "Tether tokens are referred to as stablecoins because they offer price stability as they are pegged to a fiat currency. This offers traders, merchants and funds a low volatility solution when exiting positions in the market. All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD)" $0.95 is not $1.00 and a 5% drop is not low volatility.

eudoxus 4y ago
"when exiting positions in the market" this statement applies only if you exit using tether.io. You can always (if they have the cash on hand) swap 1 USDT for 1 USD. They can't make that guarantee for <insert random exchange order book>. The reason it stays "mostly" at $1 on exchanges is because arbitragers are incentivized to do so. But again, 1USDT is ALWAYS 1USD on tether.io. So yes, the statement you quoted is accurate.
- hhmc 4y ago
  > But again, 1USDT is ALWAYS 1USD on tether.io. Until you can't redeem and 1USDT is 0USD on tether.io. The price on a 'random orderbook' is reflecting this risk.
  - eudoxus 4y ago
    > You can always (if they have the cash on hand) swap 1 USDT for 1 USD Exactly, until you can't as I outlined. The price on a randombook is a function of many things, including "percieved" risk. Its also a function of liquidity/depth and the willingness to exit fast, ignoring the 1-3% fee. Everyone and their grandfather knows tether doesn't have 1:1 asset reserves for their $80B market cap. But noone knows how much they do have and how long they can keep up the charade.
- ThePhysicist 4y ago
  Redeeming Tether via the official route takes several days as I understand (in the current situation probably more like several weeks?). So if you're a large investor you have the choice of either trusting Tether to be able to make good on the promised redemption, not knowing if it will be the case for days or weeks, or you can just go to the market and sell your Tether there at a 2 % loss. As an investor I'd always go for the second route as there's large downside risk and almost no upside potential when redeeming via tether.to. No sane investor would risk losing 100 % of their assets to escape a 2 % haircut.