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This is my face of shock and dismay. It's wild how one could, at one time, watch the influx of tether into the system and relate it directly to the price of BTC

by aliqot 4y ago

This is my face of shock and dismay. It's wild how one could, at one time, watch the influx of tether into the system and relate it directly to the price of BTC. It really makes you wonder how much tether is a necessary parasite, subsuming the scaffold of the organism's body beyond what the brain intended.

scotty79 4y ago
> watch the influx of tether into the system and relate it directly to the price of BTC Do you have some charts that show that correlation over the whole (or partial) history of tether? I have trouble even noticing tether on long term bitcoin charts.
- ves 4y ago
  …what Look at a tether volume chart vs a btcusd chart
  - Kranar 4y ago
    That says nothing. I could show you a chart of Tether's volume vs. S&P500 and you'll see a similar pattern. Big deal.
    - ves 4y ago
      right, except that nobody is buying stocks with tether.
      - scotty79 4y ago
        So it's completely accidental that btc correlates with s&p500 but it's very meaningfult that it correlates with tether?
    - RealityVoid 4y ago
      It's clear now that S&P 500 is propped by tether!
  - dontknowwhyihn 4y ago
    I overlay the BTC price chart with the chart of Tether’s market cap. The correlation is hard to miss.
  - piqi 4y ago
    This is expected. Tether is pegged to $1, BTC is not. In short, higher crypto prices means more tether. Perpetual futures contracts are also a big part of the market. They are the most common derivatives on crypto assets. It isn't always BTC, but BTC is the biggest asset in the space. Derivatives in general need to be denominated in something. Tether is the most accessible on exchanges outside the US (e.g. Binance). These contracts settle in the Tether stablecoin, not the contract's underlying. As all crypto asset prices go up, those contracts need to be settled in more Tether. When one party shorts a derivative, a counter-party needs to long the same derivative. Same thing happens with non-crypto derivatives. In the end, they cancel each other out, but the total amount of Tether would increase as the asset value increases. That money could come from other assets or USD. On the exchange-side something like this might happen... party 1 sends USD to Exchange > longs BTC contract > USD collateralizes contract party 2 sends ETH to Exchange > shorts BTC contarct > ETH collateralizes contract If ETH drops in value as it relates to USD or party 2's contract expires out of the money, the exchange would likely give party 1 the value of the contract in tether. Similar misunderstandings happen in the stock market. People will point to the notional value (amount in $) of margin debt, but ignore the total value of the market. Of course, higher debt would be needed to collateralize a more expensive asset (e.g. SPX). Also, when sending non-USD currencies to an exchange, I would guess the exchange is likely to convert them to Tether, or at least gives the option. I wouldn't want to have YEN in my account as the value sinks when I have a Tether backed contracts. That may be another source of new Tether.
    - ves 4y ago
      huh
    - PragmaticPulp 4y ago
      > This is expected. Tether is pegged to $1, BTC is not. In short, higher crypto prices means more tether. What? Tether is supposedly minted in response to fiat deposits. They accept real dollars and give Tether IOUs in return. The concern is that Tether minting seems to generate BTC price spikes. The story goes that investors are giving their money to Tether, which gives them Tethers, and then they take the Tethers and buy BTC. Nobody can seem to explain why these people aren’t just giving their money to exchanges and buying BTC without the extra steps, though.
coolestguy 4y ago
Why is "money flowing towards an asset = price goes up" surprising to you? The only part of this equations that's new is that blockchains are public and therefore you can see it happen. Would it be wild to you to see "money moves from private bank account to goldman sachs account = shares go up"?
- lazide 4y ago
  The issue is that tether gets issued with no apparent relationship to actual cash flowing into the system. They literally didn’t even have bank accounts or access to the banking system for most of this time (and may still not)

by aliqot 4y ago

scotty79 4y ago

> watch the influx of tether into the system and relate it directly to the price of BTC Do you have some charts that show that correlation over the whole (or partial) history of tether? I have trouble even noticing tether on long term bitcoin charts.

ves 4y ago
…what Look at a tether volume chart vs a btcusd chart
- Kranar 4y ago
  That says nothing. I could show you a chart of Tether's volume vs. S&P500 and you'll see a similar pattern. Big deal.
  - ves 4y ago
    right, except that nobody is buying stocks with tether.
    - scotty79 4y ago
      So it's completely accidental that btc correlates with s&p500 but it's very meaningfult that it correlates with tether?
  - RealityVoid 4y ago
    It's clear now that S&P 500 is propped by tether!
- dontknowwhyihn 4y ago
  I overlay the BTC price chart with the chart of Tether’s market cap. The correlation is hard to miss.
- piqi 4y ago
  This is expected. Tether is pegged to $1, BTC is not. In short, higher crypto prices means more tether. Perpetual futures contracts are also a big part of the market. They are the most common derivatives on crypto assets. It isn't always BTC, but BTC is the biggest asset in the space. Derivatives in general need to be denominated in something. Tether is the most accessible on exchanges outside the US (e.g. Binance). These contracts settle in the Tether stablecoin, not the contract's underlying. As all crypto asset prices go up, those contracts need to be settled in more Tether. When one party shorts a derivative, a counter-party needs to long the same derivative. Same thing happens with non-crypto derivatives. In the end, they cancel each other out, but the total amount of Tether would increase as the asset value increases. That money could come from other assets or USD. On the exchange-side something like this might happen... party 1 sends USD to Exchange > longs BTC contract > USD collateralizes contract party 2 sends ETH to Exchange > shorts BTC contarct > ETH collateralizes contract If ETH drops in value as it relates to USD or party 2's contract expires out of the money, the exchange would likely give party 1 the value of the contract in tether. Similar misunderstandings happen in the stock market. People will point to the notional value (amount in $) of margin debt, but ignore the total value of the market. Of course, higher debt would be needed to collateralize a more expensive asset (e.g. SPX). Also, when sending non-USD currencies to an exchange, I would guess the exchange is likely to convert them to Tether, or at least gives the option. I wouldn't want to have YEN in my account as the value sinks when I have a Tether backed contracts. That may be another source of new Tether.
  - ves 4y ago
    huh
  - PragmaticPulp 4y ago
    > This is expected. Tether is pegged to $1, BTC is not. In short, higher crypto prices means more tether. What? Tether is supposedly minted in response to fiat deposits. They accept real dollars and give Tether IOUs in return. The concern is that Tether minting seems to generate BTC price spikes. The story goes that investors are giving their money to Tether, which gives them Tethers, and then they take the Tethers and buy BTC. Nobody can seem to explain why these people aren’t just giving their money to exchanges and buying BTC without the extra steps, though.

coolestguy 4y ago

Why is "money flowing towards an asset = price goes up" surprising to you? The only part of this equations that's new is that blockchains are public and therefore you can see it happen. Would it be wild to you to see "money moves from private bank account to goldman sachs account = shares go up"?

lazide 4y ago
The issue is that tether gets issued with no apparent relationship to actual cash flowing into the system. They literally didn’t even have bank accounts or access to the banking system for most of this time (and may still not)