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Tether price manipulation

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Re: Tether price manipulation

#211

Post by pawelduda »

raesene9 wrote: post #36
xur17 wrote: post #30

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.

They are better regulated and therefore less risky than Tether, which raises the interesting question, Why is USDC circulation only 20% of Tethers...

Could be a first-mover advantage for Tether and the fact that there haven't really been alternatives for a long time. Even if there are now, people are slow to catch on...

Re: Tether price manipulation

#212

Post by hndudette2 »

graeme wrote: post #89
dgellow wrote: post #81

Let's say you believe that Tether is a complete fraud and will crash the market at some point. How do you take advantage of this? I'm not myself trading, but I would be interested to know how that kind of short works in practice. From what I understand, that's what bitcoin futures can be used for?

Cboe ended their bitcoin futures. As such there’s no way to bet on a bitcoin collapse that I know of, in a less risky options-like way. Shorts (if they exist) would be extremely risky, as you owe more if bitcoin rises.

There's many bitcoin derivative exchanges which allow you to short, in addition to the CME's contract.

Bitmex, Huobi, etc.

Re: Tether price manipulation

#213

Post by qeternity »

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…

Too late to edit my original comment but a lot of people pointing to the "peg" as proof that Tether is legitimate.

The only peg that exists is the one whereby you should be able to go to Tether Inc and redeem USDT for USD 1:1. That peg has never ever been demonstrated (publicly).

All the other "pegs" are just cash trading. If I trade USDT/USD on Binance...I don't actually have USD. Even on that pair, my USD profit/loss are denominated in USDT.

For anyone who disagrees with the above - please show me market where I can go sell my USDT directly for USD.

Re: Tether price manipulation

#214

Post by csomar »

paulgb wrote: post #207
csomar wrote: post #201

OP gives no proof that Tether is not holding 1:1 reserves. There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. Bitcoin price dropped to $4.000 last year and Tether exchange rate has held pretty well. It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. People regularly sell USDT on the offline market, and can exchange to USDC on many ex…

I mostly agree with your skepticism on USDT driving BTC price, but I disagree with this: > There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. All this proves is that they have something in reserve, not that it is 1:1 backed. Most modern banking operates on a fractional reserve system, but when I take cash out of my bank account I get a cash dollar 1:1 with what they debit…

That's good for 97% of the time, but not for the 3% where prices either crashes or goes way-up (volatility blackswan). These stressful situations tests the 1:1 peg. (which is why I mentioned the $4000 price crash). They probably have 1. good reserves ratios and 2. very liquid assets as reserve.

Re: Tether price manipulation

#215

Post by FabHK »

alisonkisk wrote: post #163
c-fe wrote: post #105

Earlier quoted context omitted.

like I mentioned above, it is speculated that they are the ones who are printing the tether, then use that to buy bitcoin. They are then probably hoping that whoever receives tether for selling their bitcoin does not immediately want usd, but instead is happy with the tether as it is 'backed 1:1'. (Again, I have to stress that this is a theory i read somewhere on the internet, while lots of things add up, it may also…

But who is selling their (temporarily) valuable bitcoin for worthless tether instead of USD?

Many exchanges eschew fiat due to regulation. So you can only exchange crypto for stable coin crypto there.

Re: Tether price manipulation

#216

Post by csomar »

qeternity wrote: post #208
csomar wrote: post #201

OP gives no proof that Tether is not holding 1:1 reserves. There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. Bitcoin price dropped to $4.000 last year and Tether exchange rate has held pretty well. It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. People regularly sell USDT on the offline market, and can exchange to USDC on many ex…

> It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. USDT is only liquid BECAUSE there is no redemption mechanism (or at least not one that has ever been demonstrated). If Tether came and said "sure we'll redeem these fully backed Tethers for USD 24/7/365" you would quickly find yourself with a liquidity crisis.

People can sell USDT for crypto, USDC or offline. If Tether didn't have good reserves, the price will diverge from 1:1.

Re: Tether price manipulation

#217

Post by openasocket »

JohnJamesRambo wrote: post #175
user22 wrote: post #135

Earlier quoted context omitted.

I have a question, isn't the problem with the gold standard that the amount of dollars is fixed and in order to have enough currency to drive a rapidly growing economy you would in essence be buying a gallon of milk for .25 cents? It seems to me that either you the amount of currency in circulation needs to increase or the value of the existing currency needs to increase. Taking into account the gold standard was use…

https://wtfhappenedin1971.com/ This was posted to HN and it was quite eye-opening. For those that don’t know, 1971 was when the gold standard was abandoned by Nixon. I don’t know if the graphs are cherry-picked and I hope they were honestly since the US is never going back to the gold standard and it seems to have far-reaching negative effects in every aspect of human life. To answer your .25 cent milk question it se…

I think this is a gigantic leap. They show a whole bunch of graphs without even advancing a theory as to how abandoning the gold standard caused a decline in, for example, employee compensation growth. Or divorce rates. Or ... obesity rates, really? There's so many graphs on here that it would take forever to dispute all of them, but here's some general points.

1. A lot of these graphs start at 1940 or 1950, showing a change in the trend in the early 1970s. But that was the end of WW2, where Europe was in ruins and rebuilding and America saw a massive increase in prosperity and economic output. That was a pretty unique period, it's only natural for that trend to diminish or change over time.

2. A hell of a lot happened in the late 60s and early 70s, not just abandoning the gold standard. One of these graphs is of the incarceration rate. Do you think we started seeing mass incarceration at that time because we abandoned the gold standard, or do you think it was because of the war on drugs?

3. Some of these graphs are deliberately misleading. One is of the cumulative inflation rate, and seems to show the inflation accelerate in the early 1970s. Except a healthy economy should have a steady inflation rate each year (of around 2% I believe), so this graph is supposed to be exponential! They just picked the right window so that 1971 is the inflection point.

Re: Tether price manipulation

#218

Post by deegles »

shuntress wrote: post #56
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" The narrative around bitcoin has always been "It is digital currency. It works like gold". Hence the notion of "mining" . EDIT: downvote me if you want but you are flat wrong Section 6 in the bitcoin whitepaper explicitly likens bitcoin to gold [0] > The steady addition of a constant of amount of new coins is analogous to gold miners expe…

My understanding is that the problem is not with Bitcoin, but with people buying Bitcoin with "money printed," (or unconfirmed-peg) Tether.

The same issue would arise if the USA started printing dollars and buying physical gold with it. Is that right?

Re: Tether price manipulation

#219

Post by qeternity »

csomar wrote: post #216
qeternity wrote: post #208

Earlier quoted context omitted.

> It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. USDT is only liquid BECAUSE there is no redemption mechanism (or at least not one that has ever been demonstrated). If Tether came and said "sure we'll redeem these fully backed Tethers for USD 24/7/365" you would quickly find yourself with a liquidity crisis.

People can sell USDT for crypto, USDC or offline. If Tether didn't have good reserves, the price will diverge from 1:1.

No, instead of just stating it, explain to me.

Tether's reserves only matter when people try to redeem Tethers. This is currently not possible.

So it is purely a trust game right now, and everyone has an incentive to trust (or turn a blind eye) that Tether is playing by the rules.

Re: Tether price manipulation

#220

Post by csomar »

safog wrote: post #210
csomar wrote: post #201

OP gives no proof that Tether is not holding 1:1 reserves. There is, however, a good proof that they do: Tether has held the 1:1 beg pretty well recently. Bitcoin price dropped to $4.000 last year and Tether exchange rate has held pretty well. It is important to mention that USDT is still liquid despite the lack of USD on/off-ramps. People regularly sell USDT on the offline market, and can exchange to USDC on many ex…

There's a lot of bots doing arbitrage between exchanges though. If one diverges significantly from the other, the bots will eat up the difference, I don't think you can make any claims about where the demand is coming from based on this?

Bots will arbitrage up to the transaction costs. (the price is not worth arbing if it is a small difference). Some exchanges, sometimes, lead the price and this can be visible if you are actively trading (you'll notice that the arb bots are selling in one exchange and buying in the other, aka: bearish exchange trailing the market).
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