4 ms·

It amazes me every time I look at $USDT and see it hasn't collapsed to zero yet. The flow of Tether inbound is the only thing keeping Bitcoin from its natural p

It amazes me every time I look at $USDT and see it hasn't collapsed to zero yet. The flow of Tether inbound is the only thing keeping Bitcoin from its natural price of about $5. (3 BTC for a Pizza was the price back in the day at PS:1 in Chicago)

jcpham2 4y ago
It’s fun to watch USDT arb trades in pretty much any exchange order book.
mgraczyk 4y ago
Maybe this is a good learning experience, and you could use it to update your beliefs about financial markets? If you're directionally and quantitatively wrong about some prediction for many years, it's very likely you are missing something.
- arcticbull 4y ago
  Being right at the wrong time is the same as being wrong from a financial perspective. Tether's time will come, though.
  - codehalo 4y ago
    You have been wrong for close to 10 years. At some point you need to just let it go.
    - arcticbull 4y ago
      How have I been wrong? The NYAG and the CFTC have now definitively proven me right. Letitia James says: > The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations. The CFTC says: > As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018. How exactly am I wrong? And please be specific. It's something they paid significant quantities of penalties over. The shit I've been saying is literally in government PDF form now. I suspect I'm not the one who needs to let it go.
- polygamous_bat 4y ago
  - Bernie Madoff, fund manager, 1970s-2008.
  - mgraczyk 4y ago
    Actually a good example, you should look at the actual losses incurred by investors in Madoff's fund. It would probably be educational if you think tether could "go to zero".
    - polygamous_bat 4y ago
      Here's Terra Luna price today: https://www.coinbase.com/price/terra-luna https://www.coinbase.com/price/terra-luna. Clearly, it is above zero (it's $0.000170 for those curious.) I think I would be happy to concede one USDT is worth definitely above $0.000170 while also maintaining it's worth definitely below $1.
      - piqi 4y ago
        Terra was an algorithmic stablecoin (ie not really a stablecoin). It can't be compared to Tether. There were fundamental flaws with how Terra worked. A reductive way to describe it is, Terra was backed by Luna. Luna's price was determined by the market. Luna's supply was infinite. The price would go down if market demand didn't keep up with supply increases. Doomed from the beginning.
      - mgraczyk 4y ago
        Another important lesson is to look at Luna and understand the difference between it and tether. Luna was highly leveraged and had essentially no collateral with exogenous value. Tether is sketchy and potentially fraudulently under collateralized, but clearly has substantial USD collateral.
Scoundreller 4y ago
It was 5000 btc per pizza, back in 2010 or so. https://www.marketwatch.com/amp/story/bitcoin-pizza-day-laszlo-hanyecz-spent-3-8-billion-on-pizzas-in-the-summer-of-2010-using-the-novel-crypto-11621714395 https://www.marketwatch.com/amp/story/bitcoin-pizza-day-lasz...
scotty79 4y ago
Tether prevails because betting against tether is not profitable. It could be, but the people you could bet against would go bankrupt if tether collapsed so you'd have no way to collect on your winning bet.
- outside1234 4y ago
  Thank you for this - I hadn't made this connection until your comment.
- Swenrekcah 4y ago
  So I read this explanation from Matt Levine a few weeks ago and it sounded convincing. But now I’m wondering, that was because the collateral you post against your short was assumed to be posted with the entity you borrowed the Tether from. But can’t people make deals where they post collateral with a proper bank, and then if the counterparty goes bankrupt you just pay the estate back worthless Tether and keep the dollars posted with the reputable bank? I’m not involved in these types of dealings so perhaps this is a silly question but I would have thought this was how things were done.
  - polygamous_bat 4y ago
    > But can’t people make deals where they post collateral with a proper bank... That's also a problem. No self-respecting bank is willing to touch this toxic pile of bs and bring down extra regulatory hassle on themselves.
  - graeme 4y ago
    You’re gonna have a real hard time finding someone to take the opposite side of that bet using fiat money in any size. Crypto insiders generally know Tether is a fraud and further haven’t got the fiat liquidity to make such a bet
- eaurouge 4y ago
  No, Tether has prevailed because 1 USDT has remained redeemable for approximately 1 USD since inception. That's it. More entities shorting USDT would not change that fact. So, by all means, find a venue to short USDT. Build one if it doesn't exist. If lucrative enough, you will likely find parties willing to take the other side of that bet.
eaurouge 4y ago
The market cares not what you think the value of an asset should be. By default, at some instant, the market is right. If you disagree, there are instruments with which you can express said disagreement and earn a profit for being correct. By the way, the flow of Tether inbound is the flow of market participants purchasing USDT with cash equivalents. So sure, "the flow of dollars into the stock market is the only thing keeping META from its natural price of $5" is a statement anyone can make.
- arc-in-space 4y ago
  >If you disagree, there are instruments with which you can express said disagreement and earn a profit for being correct. What, in crypto? I thought no one in their right mind dares short this stuff due to counterparty risks.

jcpham2 4y ago

It’s fun to watch USDT arb trades in pretty much any exchange order book.

mgraczyk 4y ago

Maybe this is a good learning experience, and you could use it to update your beliefs about financial markets? If you're directionally and quantitatively wrong about some prediction for many years, it's very likely you are missing something.

arcticbull 4y ago
Being right at the wrong time is the same as being wrong from a financial perspective. Tether's time will come, though.
- codehalo 4y ago
  You have been wrong for close to 10 years. At some point you need to just let it go.
  - arcticbull 4y ago
    How have I been wrong? The NYAG and the CFTC have now definitively proven me right. Letitia James says: > The OAG’s investigation found that, starting no later than mid-2017, Tether had no access to banking, anywhere in the world, and so for periods of time held no reserves to back tethers in circulation at the rate of one dollar for every tether, contrary to its representations. The CFTC says: > As found in the order, Tether held sufficient fiat reserves in its accounts to back USDT tether tokens in circulation for only 27.6% of the days in a 26-month sample time period from 2016 through 2018. How exactly am I wrong? And please be specific. It's something they paid significant quantities of penalties over. The shit I've been saying is literally in government PDF form now. I suspect I'm not the one who needs to let it go.
polygamous_bat 4y ago
- Bernie Madoff, fund manager, 1970s-2008.
- mgraczyk 4y ago
  Actually a good example, you should look at the actual losses incurred by investors in Madoff's fund. It would probably be educational if you think tether could "go to zero".
  - polygamous_bat 4y ago
    Here's Terra Luna price today: https://www.coinbase.com/price/terra-luna https://www.coinbase.com/price/terra-luna. Clearly, it is above zero (it's $0.000170 for those curious.) I think I would be happy to concede one USDT is worth definitely above $0.000170 while also maintaining it's worth definitely below $1.
    - piqi 4y ago
      Terra was an algorithmic stablecoin (ie not really a stablecoin). It can't be compared to Tether. There were fundamental flaws with how Terra worked. A reductive way to describe it is, Terra was backed by Luna. Luna's price was determined by the market. Luna's supply was infinite. The price would go down if market demand didn't keep up with supply increases. Doomed from the beginning.
    - mgraczyk 4y ago
      Another important lesson is to look at Luna and understand the difference between it and tether. Luna was highly leveraged and had essentially no collateral with exogenous value. Tether is sketchy and potentially fraudulently under collateralized, but clearly has substantial USD collateral.

Scoundreller 4y ago

It was 5000 btc per pizza, back in 2010 or so. https://www.marketwatch.com/amp/story/bitcoin-pizza-day-laszlo-hanyecz-spent-3-8-billion-on-pizzas-in-the-summer-of-2010-using-the-novel-crypto-11621714395 https://www.marketwatch.com/amp/story/bitcoin-pizza-day-lasz...

scotty79 4y ago

Tether prevails because betting against tether is not profitable. It could be, but the people you could bet against would go bankrupt if tether collapsed so you'd have no way to collect on your winning bet.

outside1234 4y ago
Thank you for this - I hadn't made this connection until your comment.
Swenrekcah 4y ago
So I read this explanation from Matt Levine a few weeks ago and it sounded convincing. But now I’m wondering, that was because the collateral you post against your short was assumed to be posted with the entity you borrowed the Tether from. But can’t people make deals where they post collateral with a proper bank, and then if the counterparty goes bankrupt you just pay the estate back worthless Tether and keep the dollars posted with the reputable bank? I’m not involved in these types of dealings so perhaps this is a silly question but I would have thought this was how things were done.
- polygamous_bat 4y ago
  > But can’t people make deals where they post collateral with a proper bank... That's also a problem. No self-respecting bank is willing to touch this toxic pile of bs and bring down extra regulatory hassle on themselves.
- graeme 4y ago
  You’re gonna have a real hard time finding someone to take the opposite side of that bet using fiat money in any size. Crypto insiders generally know Tether is a fraud and further haven’t got the fiat liquidity to make such a bet
eaurouge 4y ago
No, Tether has prevailed because 1 USDT has remained redeemable for approximately 1 USD since inception. That's it. More entities shorting USDT would not change that fact. So, by all means, find a venue to short USDT. Build one if it doesn't exist. If lucrative enough, you will likely find parties willing to take the other side of that bet.

eaurouge 4y ago

The market cares not what you think the value of an asset should be. By default, at some instant, the market is right. If you disagree, there are instruments with which you can express said disagreement and earn a profit for being correct. By the way, the flow of Tether inbound is the flow of market participants purchasing USDT with cash equivalents. So sure, "the flow of dollars into the stock market is the only thing keeping META from its natural price of $5" is a statement anyone can make.

arc-in-space 4y ago
>If you disagree, there are instruments with which you can express said disagreement and earn a profit for being correct. What, in crypto? I thought no one in their right mind dares short this stuff due to counterparty risks.