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Why Tether has not been collapsing during this bear market ?

• ac29 4y ago
  In the world of Crypto, Tether is actually one of the least sketchy players. Not because Tether is fully solvent, there are just a lot of straight up ponzi schemes and various other scams and frauds that have collapsed first. Tether having any % of actual dollars makes them more resilient to market pressure than schemes with zero real backing.
• csomar 4y ago
  People hate on Tether because they have a thing against crypto. Also these sort of headlines are click-bait and attract readers. What they don't know, as someone involved in this space, is that Tether is insanely profitable. Putting the legality of their business aside, Tether generates mad yields on their assets; which made them able to absorb lots of losses. It's profitable business and that's why they keep doing it. Also Tether is not completely the wild west as some people here assumes. They have lots of scrutiny from different US government institutions. The US could have shut them down overnight but they didn't. The US probably had its reasons for that.
• chowells 4y ago
  Because there hasn't been a run. They're definitely insolvent, but that only causes immediate failure when enough people try to withdraw at once.
  • dereg 4y ago
    “Because there hasn't been a run.” There were over $10b in redemptions over a couple days in may. “They’re definitely insolvent”. Source on the “definitely”? “but that only causes immediate failure when enough people try to withdraw at once” You mean illiquid, not insolvent.
    • JumpCrisscross 4y ago
      > There were over $10b in redemptions over a couple days in may The number of Tethers outstanding went down by $10bn. That says nothing about redemptions. They could have just cancelled Tether held in affiliated or random peoples’ wallets, we don’t know. > You mean illiquid, not insolvent If I have a $10bn debt due and $10bn of real estate, I’m illiquid. If I have a $10bn debt due and my real estate is worth $8bn, I’m insolvent. All evidence to date points to Tether being insolvent.
    • ceejayoz 4y ago
      > There were over $10b in redemptions over a couple days in may. This demonstrated they had at least $10B of the claimed $80ish at the time. Bernie Madoff was able to fulfill fairly hefty redemptions, too, until he ran out and the whole thing collapsed. Tether has yet to hit that point, but it's not evidence they've got all the money they claim to possess. We don't know how close to collapsing that $10B took them.
      • matthewdgreen 4y ago
        We also don't know how much of that $10B redemption resulted in real cash transactions, and how much might have been redeemed to Tether-affiliated business without a cash transaction taking place.
        • celestialcheese 4y ago
          This. Doesn't tether require >$250k USD value of tether to request cash redemption?
    • devmor 4y ago
      Being insolvent would also make them illiquid.
    • wmf 4y ago
      I would consider a run on Tether to be $40B of redemptions or more. Even if they're not fully backed they probably have some assets.
• jgalt212 4y ago
  My guess is because there's been net selling of BTC, which is good for Tether (net buying).
• yieldcrv 4y ago
  Because the bear market isnt consisting of people exiting crypto for fiat, it consists of people selling their other crypto assets for stablecoins like Tether and waiting for opportunities. (There are over $120bn in stablecoins, about 50% of that is Tether, and this is a fairly stable figure as the bear market progressed.) This is functionally similar to selling the stocks in your brokerage account but keeping the cash in your brokerage firm, with the addition of brokerage firm’s total cash being publicly reported in real time. It is unlikely that number goes down because people dont really withdraw from their brokerage accounts, they continue to add more cash and wait for opportunities.
  • deleted 4y ago
    [deleted]
• rossdavidh 4y ago
  If anyone had a reliable method of determining _when_ something which is unsustainable will collapse, as opposed to just knowing _that_ it will collapse, they could make a lot of money over the years. But, they probably wouldn't want to tell the rest of us their secret.
  • chatterhead 4y ago
• rs_rs_rs_rs_rs 4y ago
  "The market can remain irrational longer than you can stay solvent."
• bidirectional 4y ago
  Why would they? They're now in an incredible position -- convert everything to treasuries and yield over 4%.
  • rippercushions 4y ago
    Tether will collapse when withdrawals of USDT exceed the amount of assets they have. So all that's needed is another Luna-style shock to the system that trigger enough whales to withdraw.
    • bidirectional 4y ago
      Why? They may have acted reckless up to now with the commercial paper etc. but unless they have taken massive losses and somehow covered them up, they can just convert to risk-free assets and take the yields.
      • rippercushions 4y ago
        Why? Because if Tether has $10 billion in actual assets, hands out $20B worth of USDT, and whales redeem $10B, the remaining $10B USDT are worth nothing. And, yes, it is virtually certain that they have taken massive losses (seen the state of the crypto markets and ecosystem lately?). The big unknown, as ever, remains how much actual assets they have and how liquid they are.
        • bidirectional 4y ago
          Tether is not backed by crypto so why would crypto market losses affect it? They publicly state what their assets are and how much they're worth. People just think they're lying for whatever reason.
• 323 4y ago
  In finance, when "everybody knows X", the truth is usually the opposite. In our case, "everybody knows Tether is unbacked".