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Going to be a hell of a ride down. Wouldn’t surprise Me to wake up to sub $20k BTC
If Tether massively breaks the peg, there is a non-trivial chance of sub $2k BTC tomorrow
At some point, processing bitcoin will become uneconomic. It will then be unspendable, and the price will then drop to zero.
If Tether is backed, then Bitfinex could buy currently-discounted tethers off the market and redeem them for face value, pocketing the difference. The fact this is not happening means they really don't have the money, do they?
> The basic structure of the trade is (1) Ponzi, (2) acceptance, (3) diversification, (4) permanence
But it seems backing it with a virtual currency that can go to zero and diversification with another virtual currency wasn't a sound plan.
https://www.bloomberg.com/opinion/articles/2022-05-11/terra-...
Crypto has become forever mired with the worst parts of banking and none of the benefits of currencies backed by entities with reserves that have value, and supported by laws, taxes, and large militaries.
If Tether is backed, then Bitfinex could buy currently-discounted tethers off the market and redeem them for face value, pocketing the difference. The fact this is not happening means they really don't have the money, do they?
In the short term, they have the reserves for sure. In the short term, this is more of a classic bank-run. The Terra-coin + Luna scared a lot of cryptocoin holders, and now they're running away from another stablecoin. Even if Bitfinex had the money, the amount of traders leaving USDT has to be a colossal amount. The amount of money Bitfinex can transfer at any given time is limited, so the peg will bend and buckle.…
From another not so stable coin. Fixed that for you.
And this doesn't only apply to crypto, look at how many countries with currency pegs can maintain that when their economy turns down, and then look at how many people actually seek to own the currency at that point rather than a currency backed by something (like a gigantic economy).