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Tether (USDT) price falling to $0.95

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Re: Tether (USDT) price falling to $0.95

#11

Post by mtgx »

nwellnhof wrote: post #10
lewisflude wrote: post #2

Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?

The fact the Tether who issued USDT for presumably something around $1 aren't buying it back themselves for an easy profit should tell you something.

It doesn't tell you anything. Maybe they think the bitcoin price is going to shoot up 3xin the coming months so using their money to buy tether would be pretty stupid in that case no?

This is actually why it's so hard to tell from this whether or not this is something bad or just "normal" because tether price always reaches lower levels like this when people get out of it to buy cryptocurrencies, too.

Re: Tether (USDT) price falling to $0.95

#12

Post by nosuchthing »

lewisflude wrote: post #2

Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?

How?

It’s been a long standing allegation that tether is a fraud, counterfeited by Bitfinex to manipulate the spot price in a scheme to steal bitcoins (buying BTC with free tether printing).. [1][2]

The telltale sign of a bankrun at Bitfinex seems to be playing out, as you can see the spot price rises on Bitfinex meanwhile on other exchanges BTC spot price drops. Coinciding with the drop in USD:USDT pair losing its peg is a huge red flag.

Bitfinex might attempt a last ditch effort to avoid a MTGOX like collapse, it could be though a large enough drop of the spot price on other exchanges along with Bitfinex purchasing back their customer deposits in a fraudulent version of short selling.

Yet that assumes Bitfinex/Tether has liquid cash reserves to leverage such a trade.

https://i.imgur.com/pBO0nfY.png

https://i.imgur.com/2DkzWWm.png

[1] https://www.nytimes.com/2018/06/13/technology/bitcoin-price-...

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3195066

[2] https://medium.com/@bitfinexed/latest

Re: Tether (USDT) price falling to $0.95

#13

Post by michaelt »

mtgx wrote: post #11
nwellnhof wrote: post #10

Earlier quoted context omitted.

The fact the Tether who issued USDT for presumably something around $1 aren't buying it back themselves for an easy profit should tell you something.

It doesn't tell you anything. Maybe they think the bitcoin price is going to shoot up 3xin the coming months so using their money to buy tether would be pretty stupid in that case no? This is actually why it's so hard to tell from this whether or not this is something bad or just "normal" because tether price always reaches lower levels like this when people get out of it to buy cryptocurrencies, too.

  Maybe they think the bitcoin price is going to shoot up
  3xin the coming months so using their money to buy tether
  would be pretty stupid in that case no?
For Tether to be backed by US$, for every 1 USDT they need to hold $1 in cash or cash equivalents.

If they have invested the fiat in bitcoins, they aren't backed by US$ any more.

Re: Tether (USDT) price falling to $0.95

#14

Post by nosuchthing »

crunchiebones wrote: post #9

This also caused the price of bitcoin to go up https://www.forbes.com/sites/billybambrough/2018/10/15/bitco...

That’s not the true USD exchange rate, the “price” goes up on exchanges with USDT (tether) meanwhile any exchange with access to actual normal USD banking withdrawals have an abnormally lower spot price. If this activity persists, it would indicate the devaluation of tether which accounts for the vast majority of trade volume across the major exchanges.

Also note, the article you linked to is not Forbes but just a random blogger using the public Forbes blogging api.

Re: Tether (USDT) price falling to $0.95

#15

Post by caf »

michaelt wrote: post #13
mtgx wrote: post #11

Earlier quoted context omitted.

It doesn't tell you anything. Maybe they think the bitcoin price is going to shoot up 3xin the coming months so using their money to buy tether would be pretty stupid in that case no? This is actually why it's so hard to tell from this whether or not this is something bad or just "normal" because tether price always reaches lower levels like this when people get out of it to buy cryptocurrencies, too.

Maybe they think the bitcoin price is going to shoot up 3xin the coming months so using their money to buy tether would be pretty stupid in that case no? For Tether to be backed by US$, for every 1 USDT they need to hold $1 in cash or cash equivalents. If they have invested the fiat in bitcoins, they aren't backed by US$ any more.

This is right - Tether buying back their USDT means that they get to retire 1 USDT for 0.95c of their backing reserves, turning the remaining 0.05c into profit which they can then invest wherever they want.

Re: Tether (USDT) price falling to $0.95

#16

Post by patrickg_zill »

AznHisoka wrote: post #5
lewisflude wrote: post #2

Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?

I got a coin “HNcoin”. I deem it worth $1.00! why? because I said so. I will sell it to you for just 95c Easiest arbitrage opportunity.

You just explained the Federal Reserve...

Re: Tether (USDT) price falling to $0.95

#17

Post by hal9000xp »

As tensions with USDT rise, my prediction is that MakerDAO decentralized stablecoin will take over the market in 2019. You can see how issued DAI market cap pumping up steadily all year long almost with no break:

https://mkr.tools/

So I'm accumulating position in MKR.

Here is YC interview with backer of MakerDAO:

https://blog.ycombinator.com/blockchain-investing-with-olaf-...

Andressen Horrowitz also increasing their position in MKR:

https://medium.com/makerdao/a16z-crypto-purchases-6-of-mkr-b...

https://medium.com/makerdao/maker-sells-12m-of-mkr-to-partne...

Although there are some concerns that it's economically impossible to create fully decentralized stablecoin. Historical example:

https://en.wikipedia.org/wiki/Black_Wednesday

Failed stablecoin example:

https://coinmarketcap.com/currencies/nubits/

We will see as time goes on. Anyway, it's very interesting economic experiment.

P.S. So YC HN readers keep downvoting me even if I give links to interview on YC. Okay...

Re: Tether (USDT) price falling to $0.95

#18

Post by zekevermillion »

There's a wave of full-reserve stablecoins with more careful regulatory strategies in the pipes. For example, Sila. * If you need programmable money, and also want access to US mainstream, then I think this is increasingly going to be where you go.

* https://medium.com/@blog_53353/announcing-sila-building-the-...

Re: Tether (USDT) price falling to $0.95

#19

Post by jpatokal »

I built this site in February this year in anticipation:

http://www.untether.space/

The spread between Bitcoin priced in Tether and Bitcoin priced in USD has been holding steady at For the curious, source at https://github.com/jpatokal/untether and also submitted as a Show HN at https://news.ycombinator.com/item?id=18219034.

Re: Tether (USDT) price falling to $0.95

#20

Post by jpatokal »

lewisflude wrote: post #2

Isn't this an easy opportunity for arbitrage? Assuming it goes back up to $1. I thought that was the whole point of fiat-backed crypto?

The fundamental problem with arbitrage -- and one of the major reasons why this moment has been predicted by many -- is that Tether will not redeem USDT for USD. So you can buy all the "cheap" Tethers you like, but you can't turn them back into fiat.

Pretty much the only major exchange that does USD/USDT trades is Kraken, and the rate is looking distinctly wobbly today: https://www.coingecko.com/en/price_charts/tether/usd

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