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Very high confidence that USDC goes back to parity on Monday. Tether is benefiting from opaqueness.

by monero-xmr 4y ago

relyks 4y ago
What is your reasoning behind this?
- monero-xmr 4y ago
  The hole is worst-case around $500 million. SVB will be liquidated and Circle will see the majority of their money back. They make 5% in interest on $40 billion in assets so they can cover this hole in a quarter. They also have significant backers and the ability to raise money. Short term FUD. I have been buying all the way down to 88c and am already in the money so I’m financially incentivized to convince readers here. But this is just unwarranted panic.
  - relyks 4y ago
    Thanks for the response. I had similar reasoning. I bought at 90 cents. I figured the worst case scenario would be that the 8% assets missing from SVB would stay gone, which would make USDC valued at 92 cents. I also figured they would make interest on their t-bill assets, so this would definitely be a good long position
  - m00dy 4y ago
    I got around 8% profit in 8 hours. That's enough for me.
icelancer 4y ago
Genuinely displeased at myself for looking at USDC @ 88-90c with lots of liquidity to 91c last night and simply going to bed because I was too tired. Some people made an insane amount of money capitalizing on stupidity and irrational behavior. I'm not one of them. EDIT: I think it's most likely that it repegs to $1.00 within a week, but at 96c (current price) there's not enough risk-adjusted return for me.
- TheAlchemist 4y ago
  I think it will go back to $1.00 within a week too, but I wouldn't call trying to arbitrage that 'capitalizing on stupidity and irrational behavior'. There is a real risk that it breaks - badly. Even if the risk still low, or very low, it's significantly higher than in usual times. And if sharks find the right angle to attack, they will - and could burn it all down to 0 really quickly.
  - icelancer 4y ago
    There is basically no real chance the risk of default was actually 12%. I will absolutely buy the risk of default could be 4-5%, which is why you don't see me filling my pockets with USDC at 94-96c. Below 90c with the information we had on Friday was a silly price.
    - TheAlchemist 4y ago
      You must have some very sophisticated models to be able to distinguish between a risk of 4-5% and 12%. Impressive !
      - icelancer 4y ago
        Not really. Just look at the press releases, the data, and verify USDC's backing, down to the T-Bill number. The balances don't support a significant risk of default outside of a systemic collapse (of which USDC will be the least of our worries). Do I think there is a small chance of a systemic collapse? Sure, the Fed and the Biden administration are completely capable of blundering. Is that risk double digits? Let's be real. Again, even if the real risk is as low as 1-2% (which I think it is), on a risk-adjusted return on a limited/capped amount for 4% ROI short-term trade is not a good use of funds for most portfolios. Kelly Criterion and so forth.
- boc 4y ago
  This behavior is what traders call picking up pennies in front of a steamroller.

Very high confidence that USDC goes back to parity on Monday. Tether is benefiting from opaqueness.

relyks 4y ago

What is your reasoning behind this?

monero-xmr 4y ago
The hole is worst-case around $500 million. SVB will be liquidated and Circle will see the majority of their money back. They make 5% in interest on $40 billion in assets so they can cover this hole in a quarter. They also have significant backers and the ability to raise money. Short term FUD. I have been buying all the way down to 88c and am already in the money so I’m financially incentivized to convince readers here. But this is just unwarranted panic.
- relyks 4y ago
  Thanks for the response. I had similar reasoning. I bought at 90 cents. I figured the worst case scenario would be that the 8% assets missing from SVB would stay gone, which would make USDC valued at 92 cents. I also figured they would make interest on their t-bill assets, so this would definitely be a good long position
- m00dy 4y ago
  I got around 8% profit in 8 hours. That's enough for me.

icelancer 4y ago

Genuinely displeased at myself for looking at USDC @ 88-90c with lots of liquidity to 91c last night and simply going to bed because I was too tired. Some people made an insane amount of money capitalizing on stupidity and irrational behavior. I'm not one of them. EDIT: I think it's most likely that it repegs to $1.00 within a week, but at 96c (current price) there's not enough risk-adjusted return for me.

TheAlchemist 4y ago
I think it will go back to $1.00 within a week too, but I wouldn't call trying to arbitrage that 'capitalizing on stupidity and irrational behavior'. There is a real risk that it breaks - badly. Even if the risk still low, or very low, it's significantly higher than in usual times. And if sharks find the right angle to attack, they will - and could burn it all down to 0 really quickly.
- icelancer 4y ago
  There is basically no real chance the risk of default was actually 12%. I will absolutely buy the risk of default could be 4-5%, which is why you don't see me filling my pockets with USDC at 94-96c. Below 90c with the information we had on Friday was a silly price.
  - TheAlchemist 4y ago
    You must have some very sophisticated models to be able to distinguish between a risk of 4-5% and 12%. Impressive !
    - icelancer 4y ago
      Not really. Just look at the press releases, the data, and verify USDC's backing, down to the T-Bill number. The balances don't support a significant risk of default outside of a systemic collapse (of which USDC will be the least of our worries). Do I think there is a small chance of a systemic collapse? Sure, the Fed and the Biden administration are completely capable of blundering. Is that risk double digits? Let's be real. Again, even if the real risk is as low as 1-2% (which I think it is), on a risk-adjusted return on a limited/capped amount for 4% ROI short-term trade is not a good use of funds for most portfolios. Kelly Criterion and so forth.
boc 4y ago
This behavior is what traders call picking up pennies in front of a steamroller.