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You can't just Excel the Tether short because the basic premise is no one knows the truth about them. Tether on the surface is a perfect business: people give

You can't just Excel the Tether short because the basic premise is no one knows the truth about them. Tether on the surface is a perfect business: people give them real money in exchange for tokens they mint themselves for free. They don't have to pay any interest, they get tons of float, they're denominated in the world's primary reserve currency, they have almost no regulatory burden, the tech is mostly other peoples problem, etc. It's literally impossible for them to lose money, even if the whole rest of the crypto world blows up--unless you believe they're being stupid risky with their reserves, or that they don't actually have 1-to-1 reserves in dollar denominated assets. But if you believe it is only the former (like they have it all in high-yield Chinese real estate developer paper) then why not just short the risky asset directly? The reason people are attracted to this short is because they believe it is in fact the latter scenario, and that eventually some event (or series of events) will reveal the emperor has no (or at least not enough) clothes and the peg will collapse. My point is if/when it does it's going to take everything else down with it: Tether is the market, its daily trade volume is roughly the sum of every other currency's, there is no way BTC/USD can shrug off a USDT depeg.

baobabKoodaa 4y ago
> You can't just Excel the Tether short because the basic premise is no one knows the truth about them. You can model the expected value of all kinds of bets without knowing what the exact outcomes will be. > if you believe [that Tether has solid reserves] ... No, I don't believe that. Tether is a pile of burning garbage on a train wreck that's happening in slow motion over multiple years. Don't assume that I must be a Tether bull just because I disagreed with you on some related point. > The reason people are attracted to this short is because they believe it is in fact the latter scenario, and that eventually some event (or series of events) will reveal the emperor has no (or at least not enough) clothes and the peg will collapse. My point is if/when it does it's going to take everything else down with it [...] I understood your point the first time you explained it, and I already explained to you why you are wrong. Yes, if Tether collapses, everything else will crash as well. That's not the point of contention here. The point of contention is whether shorting Tether has the same expected value and risk as shorting BTC. It doesn't, because the risk that Tether goes up from $1.00 to $2.00 is practically non-existant, whereas the risk that BTC doubles in price is considerable. If you make any kind of simple EV calculations (with any assumptions you want!) you will immediately see that these bets are quite different in nature.

baobabKoodaa 4y ago

> You can't just Excel the Tether short because the basic premise is no one knows the truth about them. You can model the expected value of all kinds of bets without knowing what the exact outcomes will be. > if you believe [that Tether has solid reserves] ... No, I don't believe that. Tether is a pile of burning garbage on a train wreck that's happening in slow motion over multiple years. Don't assume that I must be a Tether bull just because I disagreed with you on some related point. > The reason people are attracted to this short is because they believe it is in fact the latter scenario, and that eventually some event (or series of events) will reveal the emperor has no (or at least not enough) clothes and the peg will collapse. My point is if/when it does it's going to take everything else down with it [...] I understood your point the first time you explained it, and I already explained to you why you are wrong. Yes, if Tether collapses, everything else will crash as well. That's not the point of contention here. The point of contention is whether shorting Tether has the same expected value and risk as shorting BTC. It doesn't, because the risk that Tether goes up from $1.00 to $2.00 is practically non-existant, whereas the risk that BTC doubles in price is considerable. If you make any kind of simple EV calculations (with any assumptions you want!) you will immediately see that these bets are quite different in nature.