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Great news. Hopefully this causes bitcoin and crypto to crash all the way below $10,000.
by colesantiago 3y ago
Great news.
Hopefully this causes bitcoin and crypto to crash all the way below $10,000.
- HPsquared 3y agoWhat's the mechanism?
- dheera 3y agoIt was suspected that a lot of USDT is backed by Evergrande notes, though they have denied it. Evergrande liquidation may cause a USDT liquidation and cause USDT to lose peg. There are often idiots that will drag the rest of crypto including bitcoin with it, though.
- jdewerd 3y ago5% on $100B can patch one hell of a balance sheet hole.
- pstrateman 3y agoThat kind of thing has usually had the opposite effect. If USDT is worthless then you want to sell it, causing the price of Bitcoin to rise on those exchanges.
- dheera 3y agoIf you sell it for BTC, yes, though it's more likely people will get spooked of crypto and sell it for USD.
- loeg 3y agoIsn't the point of USDT that the vast majority of its holders are locked out of USD? They can liquidate to BTC but it is unclear that they can actually get USD out.
- dheera 3y agoIt would be nice if the market worked that way and every coin helped each other out as a "crypto team" to beat out fiat together, but the reality is BTC holders are probably going to be spooked and not give you much BTC for your USDT. And then everyone gets spooked of crypto as a whole and sells for fiat. Basically whenever "shit" happens all of crypto goes down.
- loeg 3y agoI don't think this is responsive to my comment. You wrote: > it's more likely people will get spooked of crypto and sell [USDT] for USD. I don't think (the vast majority of) USDT holders can sell for USD fiat -- because they are locked out of the US financial system for one reason or another. That is, actually, the reason they are holding USDT instead. They can (try) to exit via BTC, and maybe they can cash out for some other fiat currency. Just not USD.
- cko 3y agoIf USDT can no longer be redeemed for USD, then people may buy BTC instead?
- littlestymaar 3y agoWhy would someone accept your USDT and give you bitcoin if USDT is de-pegged and worthless?
- loeg 3y agoDe-pegged is just any value less than $1. If USDT is 50% collateralized, maybe it is worth $0.50, which is de-pegged but not worthless.
- Phlarp 3y agoWe said we were 100% collateralized, actually it's only 50% but you can trust us that it really is 50% collateralized this time and we aren't lying again. Transact with trust!
- littlestymaar 3y agoDe-pegged (I means really de-pegged, not a transient .97c a dollar on exchanges like it happened) means it's not fulfilling its promise, hence the trust is lost. Also, Tether would try to save face, by honoring USDT redemption at 1$ as long as they can, which drains their reserves. So if they aren't able to do it anymore, it means that they don't have anything left, and USDT is now worthless. These things are highly non-linear and bank runs can kill a bank in no time (and tether is functionally a bank).
- loeg 3y agoSure. People disinclined to trust Tether's word are already out of USDT. Clearly, a lot remain. Some of those people might attempt to profit from arbitraging a de-pegged Tether (maybe at $0.97 rather than $0.50 but it's the same principle).
- 3y ago
- lmm 3y agoThe price of USDT will fall off a cliff, yes. That won't make the price of Bitcoin rise except when denominated in USDT.
- rekttrader 3y agoUSDT is the 25th largest holder of T-bills. This is a bit of bullshit fud.
- datadrivenangel 3y agoIf they only have 50% of the money they need, they're still missing half, even if that half is huge.
- rvnx 3y agoIt won't be missing anyway, because they are getting paid interest on what is still here :) Whether it's a scam or not, it works.
- timmytokyo 3y agoTether is an unaudited black box, so no one really knows what their reserves are composed of. Tether's also been caught lying about their reserves numerous times [1], so it would be insane to think they're a credible store of value. Given their history and opaqueness, it's reasonable to assume shenanigans. [1] https://www.dirtybubblemedia.com/p/examining-tethers-secret-loan-portfolio https://www.dirtybubblemedia.com/p/examining-tethers-secret-...
- rekttrader 3y agoLess than 24 hours later.... USDT posts 2b in profit.
- HWR_14 3y agoWhy would the USDT tell anyone if they were no longer backed 1:1?
- lmm 3y agoThey haven't told anyone anything. Optimists have assumed the unknown/missing part of their "collateral" is Evergrande bonds rather than having gone up their team's collective noses.
- rossdavidh 3y agoI think if it had happened two years ago, this would have been the result, because at that time Tether was mostly in Chinese bonds (rumor has it), and Tether supported a large part of total bitcoin trade volume. However, it is possible that they have spent the last two years rotating out of Chinese bonds into T-bills. In fact, it's pretty likely that they have tried to do that; the question is how well they've been able to.
- rossdavidh 3y agoFor those interested in more background: https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3 https://crypto-anonymous-2021.medium.com/the-bit-short-insid...
- yread 3y agoBest outcome would be housing getting cheaper. One can dream