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Tether price manipulation

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Re: Tether price manipulation

#21

Post by raesene9 »

shuntress wrote: post #14

Can someone please explain to me how Tether is "injected" into Bitcoin? The entire argument seems to hinge on this but it is not (as far as I can see) explained. Are people accepting Tether in trade for BTC under the assumption that Tether will always be exchanged 1:1 for USD when this is not actually the case? EDIT: The answer seems to be yes Tether is 1-to-1 with "I O U $1" and enough people are accepting these IOU…

Yep, AFAIK Tether is used by several exchanges that have problems getting direct banking relationships, as a on-ramp for funds.

Tether originally promised that they were 1-2-1 backed with actual currency reserves, but had to abandon that statement when it became apparent they'd lost a load of money to Crypto Capital.

Tether still claim to be 1-2-1 backed with "investments" but there has never been a completed 3rd party audit of that claim, so it literally has to be taken on trust.

Re: Tether price manipulation

#22

Post by danivaz »

tomtomtom777 wrote: post #17

I still don't quite understand how they can manipulate the price. The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. Sure, they may be spending these dollars elsewhere, thus holding a fractional reserve. Sure this may illegal and get them in trouble. But this doesn't effect the dollar value for which these USDT's and thus Bitcoins are traded. As long as a USDT is $1, nobody is manipulating the pr…

The author is saying there are more tokens in circulation than dollars in their reserve.

Re: Tether price manipulation

#23

Post by raesene9 »

ackbar03 wrote: post #20

Wait I don't get it, it's not fully backed but it's still backed somewhat right? I thought it was only a chunk of USD that was missing? Or did they completely abandon the usd backing? If it's still somewhat backed and just that chunk of usd that remains unaccounted for, printing tether isn't exactly a scam? People trade their usd for printed tethers and use that to buy bitcoin, so it's still essentially people exchan…

no-one knows how backed it is. iFinex claim it's 100% backed. They may, or may not, be telling the truth.

The question is do you believe that billions of dollars are flowing into an unaudited stablecoin when other, audited, stablecoins exist...

Re: Tether price manipulation

#24

Post by xur17 »

sharperguy wrote: post #19

Surely the only way to keep the valuer of tether stable is to "print" more of it whenever its value starts to increase? Otherwise it wouldn't be always worth $1.

That or provide on and off ramps that users can use to arbitrage any deviations from a value of $1.

Re: Tether price manipulation

#25

Post by Speednet »

What a ridiculous Twitter thread showing absolutely no causality between Tether and Bitcoin. You might as well show that SpaceX rocket launches coincide with a rise in Bitcoin prices.

There was a successful SpaceX launch yesterday, and Bitcoin went over $40,000 for the first time. In 2020, SpaceX had its best year ever for successful launches and returns of the first stage, perfectly coinciding with Bitcoin's meteoric rise in value. So Bitcoin must be tied to successful SpaceX launches.

Re: Tether price manipulation

#26

Post by jaggirs »

tomtomtom777 wrote: post #17

I still don't quite understand how they can manipulate the price. The price of a USDT is 1 dollar. They give out new USDT for $1 a piece. Sure, they may be spending these dollars elsewhere, thus holding a fractional reserve. Sure this may illegal and get them in trouble. But this doesn't effect the dollar value for which these USDT's and thus Bitcoins are traded. As long as a USDT is $1, nobody is manipulating the pr…

They print additional usdt, that are not backed by dollars, and buy bitcoin with them.

Re: Tether price manipulation

#27

Post by dylkil »

qeternity wrote: post #15

The problem is that in the early days of @Bitfinex'ed this was all a bit of a sideshow because there was genuinely large interest from retail and the outcome of crypto was far less certain. However three years on, crypto still does not have a "killer app" and is 99.99% used for speculation. Bitcoin's narrative has had to morph from "digital currency" to "digital gold". But in the depths of the March panic, Tether jum…

>Bitcoin's narrative has had to morph from "digital currency" to "digital gold".

This narrative was an intentional morphing by various actors within the space (Blockstream) who believed raising the blocksize to allow higher throughput would cause 'centralisation'. Instead they want people to use layer 2 solutions such as blockstreams own federated product Liquid.

Re: Tether price manipulation

#28

Post by qeternity »

sharperguy wrote: post #19

Surely the only way to keep the valuer of tether stable is to "print" more of it whenever its value starts to increase? Otherwise it wouldn't be always worth $1.

Not sure if trolling but why would Tether ever be worth more than $1? Printing USDT is not the same is issuing new fully backed USDT.

Re: Tether price manipulation

#29

Post by qeternity »

xur17 wrote: post #24
sharperguy wrote: post #19

Surely the only way to keep the valuer of tether stable is to "print" more of it whenever its value starts to increase? Otherwise it wouldn't be always worth $1.

That or provide on and off ramps that users can use to arbitrage any deviations from a value of $1.

Which they cannot do because 1) they don't have any banking and 2) they cannot allow redemptions which would risk a run on their reserves (to the degree those exist at all).

Re: Tether price manipulation

#30

Post by xur17 »

The graphs show a strong correlation between printing of USDT and the Bitcoin price rising, but it's not clear to me which one triggers the other.

Interestingly, USDC seems to follow similar minting patterns, and they post quarterly audits of their books / are much better regulated.

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