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No, because someone would have to trade / buy the Tether, and no one would, so the price of Tether would drop like a stone - not the other way around.
by onlyrealcuzzo 4y ago
No, because someone would have to trade / buy the Tether, and no one would, so the price of Tether would drop like a stone - not the other way around.
- thematrixturtle 4y agoBoth would happen simultaneously. Think of crypto like a balloon with only a narrow exit at one end going out into fiat: if you push down on Tether, BTC/ETH will inflate in Tether terms (because everybody who can moves into other cryptos) but deflate in USD terms (because there will be a run for the exits and a lack of buyers).
- deleted 4y ago[deleted]
- red_trumpet 4y agoSo both BTC/ETH and Tether would deflate in USD terms...
- SilasX 4y agoSomebody would! (Or rather, some thing.) There are a lot of smartcontract liquidity pools in Ethereum that facilitate trade between two tokens. The set an exchange rate by a formula that only looks at how much of each token is currently in the pool, not at prevailing market price[1]. So if and when it's apparent that Tether will be worthless, there will be a mad dash to dump it in those LPs in exchange for the other tokens, which was what happened to TerraUSD [2]. Here's a list of the LPs that have Tether as one token, just on Uniswap: https://info.uniswap.org/#/tokens/0xdac17f958d2ee523a2206206994597c13d831ec7 https://info.uniswap.org/#/tokens/0xdac17f958d2ee523a2206206... [1] This dynamic has the effect of writing a persistent ITM option with intrinsic value equal to LP's price divergence from the market exchange rate. [2] Here's Curve's infamous 4pool, which has TerraUSD (UST) and three other non-defunct stablecoins -- it's 97% UST now: https://curve.fi/4pool https://curve.fi/4pool