Tether Is Breaking Its Peg to the Dollar • Hacker News Board

Re: Tether Is Breaking Its Peg to the Dollar

#11

Post by mtgx » Sun, Jan 28, 2018, 7:27 PM UTC

brokensegue wrote: post #3

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

Which makes the article and especially the title fake news.

Tether deviated by 10 cents last May, and then it quickly recovered. Tether may have its issues, but this move alone tells us absolutely nothing. Saying that Tether is dying because of this move alone is absolute nonsense.

Such deviations can happen when one or a few whales take out their tens of millions of dollars out of Tether, or put their cryptocurrencies into Tether (that's when it rises by 5-10 cents).

Re: Tether Is Breaking Its Peg to the Dollar

#12

Post by ericb » Sun, Jan 28, 2018, 7:29 PM UTC

empath75 wrote: post #4

The usdt/usd pair on most markets it trades on is heavily manipulated with wash trading. It doesn’t take a big buy order for bitfinex to bounce the price back to $1. What you really need to watch is the widening spread in price between bitfinex and other exchanges which implies that people are buying crypto at inflated usdt prices because they don’t trust usdt any more. I think if either that continues or the price o…

It seems like there's about a $150-$200 difference between the USD/USDT exchanges at the moment. Note that CEX.io has one of the highest, and they are also currently unable to allow USD withdrawls "because of high demand backing up their financial partner."

https://www.cryptocompare.com/coins/btc/markets/USD

CEX.io (see middle paragraph for shady explanation) https://blog.cex.io/news/recent_updates-16999

Re: Tether Is Breaking Its Peg to the Dollar

#13

Post by hidenotslide » Sun, Jan 28, 2018, 7:30 PM UTC

brokensegue wrote: post #3

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

Either tether is trading at a discount due to liquidity issues like a closed-end fund or due to real credit issues (fraud).

Re: Tether Is Breaking Its Peg to the Dollar

#14

Post by crypt1d » Sun, Jan 28, 2018, 7:35 PM UTC

digianarchist wrote: post #6

brokensegue wrote: post #3

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

That's still approx a $44 million loss on their market cap.

which is really just a drop in the bucket compared to the daily crypto market oscillations.

Re: Tether Is Breaking Its Peg to the Dollar

#15

Post by SilasX » Sun, Jan 28, 2018, 7:37 PM UTC

Title is misleading; it makes it sound like Tether management is withdrawing some promise that USDTs can be redeemed at par. That would be much bigger news than the actual story, that they are trading for less than par.

Not that I’m recommending you touch tethers with a ten foot pole!

Re: Tether Is Breaking Its Peg to the Dollar

#16

Post by 21 » Sun, Jan 28, 2018, 7:41 PM UTC

bhouston wrote: post #7

I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies. It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me. BTW: https://www.coindesk.com/t…

> It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic".

There are no two currencies here, only one - USD. So no magic is required if they don't lie about their USD holdings.

Re: Tether Is Breaking Its Peg to the Dollar

#17

Post by brokensegue » Sun, Jan 28, 2018, 7:42 PM UTC

mtgx wrote: post #11

brokensegue wrote: post #3

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

Which makes the article and especially the title fake news . Tether deviated by 10 cents last May, and then it quickly recovered. Tether may have its issues, but this move alone tells us absolutely nothing. Saying that Tether is dying because of this move alone is absolute nonsense. Such deviations can happen when one or a few whales take out their tens of millions of dollars out of Tether, or put their cryptocurrenc…

no. "fake news" does not mean just wrong news or bad analysis. that meaning is a co-option of the term which was meant to refer to whole-cloth fabricated stories or hoaxes often meant to bias.

Re: Tether Is Breaking Its Peg to the Dollar

#18

Post by petertodd » Sun, Jan 28, 2018, 7:42 PM UTC

bhouston wrote: post #7

I am reminded of this: https://en.wikipedia.org/wiki/Black_Wednesday George Soros broke the Bank of English's attempt to maintain a minimum exchange rate for the Pound against various other European currencies. It was this experience that taught me that you can not cost free fix the exchange rate between currencies unless you are using "magic". And USDT has always seemed magical to me. BTW: https://www.coindesk.com/t…

No, it's very easy to fix the exchange rate between currencies: make them actually be the same currency.

Tether is supposed to be be 100% backed by USD on a 1:1 basis. If that's true, while it may temporarily go higher and lower, and should always return to normal as actual USD moves in and out of the system.

The controversy about Tether is very simple: they haven't taken any steps to convince people that's actually true, and the default assumption you should make with such systems is they're scams that aren't actually backed by the currencies they claim to be backed by.

Re: Tether Is Breaking Its Peg to the Dollar

#19

Post by brokensegue » Sun, Jan 28, 2018, 7:43 PM UTC

hidenotslide wrote: post #13

brokensegue wrote: post #3

I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.

Either tether is trading at a discount due to liquidity issues like a closed-end fund or due to real credit issues (fraud).

well it's the former? right?

Re: Tether Is Breaking Its Peg to the Dollar

#20

Post by brndnmtthws » Sun, Jan 28, 2018, 7:44 PM UTC

A good book to read for anyone interested in economics is called "The End of Alchemy: Money, Banking, and the Future of the Global Economy", by Mervyn King, who was head of the Bank of England for about 10 years and during the financial crises of 2007-8. In the book, he discusses "the alchemy of money" which he roughly defines as how money isn't necessarily backed by any tangible assets. A lot of what happens in the banking system is pure alchemy. A fascinating read IMO.