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Why would Bitcoin collapse as a consequence of Tether collapsing? I would expect to see a temporary drop due to market instability and low investors' confidence

Why would Bitcoin collapse as a consequence of Tether collapsing? I would expect to see a temporary drop due to market instability and low investors' confidence amid fear, but surely not a collapse.

woodruffw 4y ago
All available public evidence points to a significant portion (majority?) of Bitcoin’s current valuation being supported by Tether.
- deleted 4y ago
  [deleted]
- nullc 4y ago
  I don't believe I've ever seen any such evidence. The only attempt I've seen about supporting that is a time series analysis that showed that the total tether issued increased at times when Bitcoin's price increased-- which is exactly what you'd expect to see happen without any funny business: 'crypto' mania fuels demand for both Bitcoin and tether. I don't have any doubt that tether is up to all manner of funny business (e.g. printing unbacked coins and loaning them out for people to 'invest' in defi ponzis), but mostly its used to trade against varrious altcoins that are only traded on off-shore exchanges not used to trade against Bitcoin. The arguments that it plays some major role with bitcoin from what I see appear to be conjecture and logically unsound reasoning rather than clear and convincing evidence. If you're aware of something better-- I'd love to see it. Absent that kind of connection I wouldn't be surprised to see demand for Bitcoin _rise_ once the instability fear cleared: prior to tether being used to purchase sketch-coins at offshore exchanges Bitcoin was the exclusive option for that purpose.
- HeartStrings 4y ago
  Can you link to this evidence, pleaase?
NotYourLawyer 4y ago
Because tether is being used to create artificial demand for btc.
- johnny_canuck 4y ago
  Can you provide a source for this? I'm curious to read more
KevinGlass 4y ago
So long as you can buy drugs with Bitcoin it will maintain a certain minimum value, regardless of what happens with these scam companies. If tether where to completely collapse I estimate Bitcoin would fall to to no less then 30% of it’s current value. The price of bitcoin will never fall faster then the time it takes to login to a darknet market and update a listing.
- __MatrixMan__ 4y ago
  I'm not up to date, but a few years back I got the impression that Bitcoin was losing that fight to Monero. Is that not so?
  - RealityVoid 4y ago
    Oh, yeah, bitcoin is actually quite transparent for the outside so most darknet exchange use Monero last time I checked. Bitcoin is a whole different beast at this point.
  - runnerup 4y ago
    Theoretically…yes. In actuality governments can make it impossible to exchange Monero for USD/fiat which would render it fairly useless (at scale, anyways). This is already being frameworked. “Coffee shop” sales of cryptocurrency (even BTC) is now de facto illegal in the USA. You can’t post a Craigslist ad saying “hey I have 100 BTC willing to exchange for USD”. The feds will (and have!!) arrest you for violating AML/KYC. XMR is currently being considered for an “asset non-grata” classification where any exchange doing USD/XMR transactions would be held accountable for facilitating money laundering because participation in XMR inherently assists in laundering money.
    - n0tth3dro1ds 4y ago
      [dead]
    - __MatrixMan__ 4y ago
      I question the feds' ability to pull this off. Suppose I buy a bored ape or whatever, and then I sell it, and then the person I sold it to uses one of those non-KYC exchanges to buy XMR. How are the feds going to know whether it was me on both sides or not? Are they going to correlate my IP to McDonalds wifi and subpoena the security footage and get me via facial recognition? At some point it's just too expensive to chase down.
Chabsff 4y ago
Each Tether, on paper, represents a single US dollar locked into the crypto ecosystem. It's kind of like a company's war chest bank account: no matter what happens, the value of the asset is worth at least that much. But it's a little more pernicious than that. Tethers are typically emmited conveniently at times where the price of crypto is going down, propping the value up. If the current value of BTC exists because of artificial upwards pressure, it's likely that the value should settle back down to where it would have been if not for said pressure when released from it.
- lazide 4y ago
  FYI - Tether stopped even pretending it actually represented that anymore, and NYAG dig up plenty of evidence that it was never actually even close to representing real money. They didn’t even have bank accounts back in ‘17!
LatteLazy 4y ago
You're question is the correct one to ask. You are bring down voted because people want to pretend one possible crypto scam discredits all crypto and can't comprehend that crypto is more complex than that.

Why would Bitcoin collapse as a consequence of Tether collapsing? I would expect to see a temporary drop due to market instability and low investors' confidence amid fear, but surely not a collapse.

woodruffw 4y ago

All available public evidence points to a significant portion (majority?) of Bitcoin’s current valuation being supported by Tether.

deleted 4y ago
[deleted]
nullc 4y ago
I don't believe I've ever seen any such evidence. The only attempt I've seen about supporting that is a time series analysis that showed that the total tether issued increased at times when Bitcoin's price increased-- which is exactly what you'd expect to see happen without any funny business: 'crypto' mania fuels demand for both Bitcoin and tether. I don't have any doubt that tether is up to all manner of funny business (e.g. printing unbacked coins and loaning them out for people to 'invest' in defi ponzis), but mostly its used to trade against varrious altcoins that are only traded on off-shore exchanges not used to trade against Bitcoin. The arguments that it plays some major role with bitcoin from what I see appear to be conjecture and logically unsound reasoning rather than clear and convincing evidence. If you're aware of something better-- I'd love to see it. Absent that kind of connection I wouldn't be surprised to see demand for Bitcoin _rise_ once the instability fear cleared: prior to tether being used to purchase sketch-coins at offshore exchanges Bitcoin was the exclusive option for that purpose.
HeartStrings 4y ago
Can you link to this evidence, pleaase?

NotYourLawyer 4y ago

Because tether is being used to create artificial demand for btc.

johnny_canuck 4y ago
Can you provide a source for this? I'm curious to read more

KevinGlass 4y ago

So long as you can buy drugs with Bitcoin it will maintain a certain minimum value, regardless of what happens with these scam companies. If tether where to completely collapse I estimate Bitcoin would fall to to no less then 30% of it’s current value. The price of bitcoin will never fall faster then the time it takes to login to a darknet market and update a listing.

__MatrixMan__ 4y ago
I'm not up to date, but a few years back I got the impression that Bitcoin was losing that fight to Monero. Is that not so?
- RealityVoid 4y ago
  Oh, yeah, bitcoin is actually quite transparent for the outside so most darknet exchange use Monero last time I checked. Bitcoin is a whole different beast at this point.
- runnerup 4y ago
  Theoretically…yes. In actuality governments can make it impossible to exchange Monero for USD/fiat which would render it fairly useless (at scale, anyways). This is already being frameworked. “Coffee shop” sales of cryptocurrency (even BTC) is now de facto illegal in the USA. You can’t post a Craigslist ad saying “hey I have 100 BTC willing to exchange for USD”. The feds will (and have!!) arrest you for violating AML/KYC. XMR is currently being considered for an “asset non-grata” classification where any exchange doing USD/XMR transactions would be held accountable for facilitating money laundering because participation in XMR inherently assists in laundering money.
  - n0tth3dro1ds 4y ago
    [dead]
  - __MatrixMan__ 4y ago
    I question the feds' ability to pull this off. Suppose I buy a bored ape or whatever, and then I sell it, and then the person I sold it to uses one of those non-KYC exchanges to buy XMR. How are the feds going to know whether it was me on both sides or not? Are they going to correlate my IP to McDonalds wifi and subpoena the security footage and get me via facial recognition? At some point it's just too expensive to chase down.

Chabsff 4y ago

Each Tether, on paper, represents a single US dollar locked into the crypto ecosystem. It's kind of like a company's war chest bank account: no matter what happens, the value of the asset is worth at least that much. But it's a little more pernicious than that. Tethers are typically emmited conveniently at times where the price of crypto is going down, propping the value up. If the current value of BTC exists because of artificial upwards pressure, it's likely that the value should settle back down to where it would have been if not for said pressure when released from it.

lazide 4y ago
FYI - Tether stopped even pretending it actually represented that anymore, and NYAG dig up plenty of evidence that it was never actually even close to representing real money. They didn’t even have bank accounts back in ‘17!

LatteLazy 4y ago

You're question is the correct one to ask. You are bring down voted because people want to pretend one possible crypto scam discredits all crypto and can't comprehend that crypto is more complex than that.