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Tether starting to lose its peg too, after Terra did

community.intercoin.org

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Re: Tether starting to lose its peg too, after Terra did

#91

Post by phphphphp »

fastball wrote: post #47
NhanH wrote: post #5

Earlier quoted context omitted.

If Tether massively breaks the peg, there is a non-trivial chance of sub $2k BTC tomorrow

To me that math doesn't add up very well. Let's assume that 5 minutes from now, Tether drops to zero. Turns out Tethers were approximately 100% unbacked. There are currently ~$80B USDT in circulation. Even if you also assume 100% of USDT holders were also Bitcoin maxis who were using USDT as a "stable store of value" when they periodically want to exit their BTC position, the market cap of Bitcoin is still ~$500B, so…

Market cap is not the sum of all money put in, but the total supply multiplied by the latest price. The entire market could, conceivably, be supported by only a few billion in real dollars. I won’t try and guess the correlation between USDT price and BTC price, but if USDT goes to zero, it’ll be a lot more than a 16% hit — before even considering USDTs broader role in the market.

Re: Tether starting to lose its peg too, after Terra did

#94

Post by russellbeattie »

thematrixturtle wrote: post #64
chriswd wrote: post #33

Earlier quoted context omitted.

Wow! This is moving really fast, forget what I've said. xD

$0.95 and dropping as I type this.

Seems to be recovering already. Bounced back to $0.97. The show might be over...

Re: Tether starting to lose its peg too, after Terra did

#95

Post by Nursie »

So the most interesting thing to me, here, is that a lot of exchanges seem to denominate in USDT, not USD. And the BTC price is currently different between the two on exchanges that have both -

https://trade.kraken.com/charts/KRAKEN:BTC-USD https://trade.kraken.com/charts/KRAKEN:BTC-USDT

I wonder how long it'll take things to ripple through the ecosystem if the price of tethers continues to be other than $1.

(edit - and I may be wrong, but it looks to me like the USD price is following the USDT price by approximately that offset, so as tether regains some of its peg, the USDT price doesn't move much, but the USD price heads back up towards it. Feels like the tail wagging the dog..)

Re: Tether starting to lose its peg too, after Terra did

#96

Post by Slartie »

turtledove wrote: post #59
rtpg wrote: post #32

Earlier quoted context omitted.

You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!

So wait, assuming I had a hundred k, and they were willing and able to pay out, I could buy 97k of tether and redeem it for 100k? Just an instant 3% return? This seems like there's no way they are opening themselves up to arbitrage like this.

It's not "they" as in "the people behind Tether" who are paying the 3%. The 3% returns - assuming the exchange works out in the end and you get your 100k USD - are paid for by the random guys who owned the 100k USDT that you bought on the open market. Effectively those were people who assumed the peg would break and they would be better off selling their USDT while they still got 97k USD for it.

Re: Tether starting to lose its peg too, after Terra did

#97

Post by xmprt »

qbasic_forever wrote: post #38
unsupp0rted wrote: post #17

Earlier quoted context omitted.

Would BTC be worth buying at sub-$2k? I never saw the use-case for it. I’d sooner use a faster, cheaper, more energy-efficient, more centralized crypto like XLM or XRP. But even then: for payments it’s hard to compete with Visa/Mastercard for speed and safety. And as a store of value all crypto is crazy volatile. If BTC goes sub $2k, would anybody reasonably want it anymore or would the emperor have no clothes?

There's probably still some value in it for darknet activities like sales of illicit goods, ransom payments, etc.

I think what the poster is asking, is why wouldn't communities/darknet activites deal with other cryptocurrencies which are objectively better than Bitcoin in terms of functionality although they have a smaller community and network at the moment.

Re: Tether starting to lose its peg too, after Terra did

#98

Post by junofan »

nrp wrote: post #88
rtpg wrote: post #32

Earlier quoted context omitted.

You need to show up with $100k to do the redemption. Granted if you did the round trip with only $10k you’re looking at peanuts in arbitrage but it _is_ a way for them to prevent real arbitrage that feeds into itself. I bet the fact that people wanting to short don’t believe they have the funds doesn’t help. But hey if you are a millionaire short tether might be worth setting up the recurring trade out!

USDT is now <$0.95, so the arbitrage opportunity is getting more exciting by the minute. It will be very interesting to see how long they can hold out against that.

Someone just put a couple monster buys on FTX right at 0.97 so I’m guessing 3% is juicy enough for somebody.

Re: Tether starting to lose its peg too, after Terra did

#99

Post by ezzaf »

artdigital wrote: post #37

Anything on any market can shift its price to the red or green. Tether and USDC are just tokens, so if there is enough sell pressure and not enough liquidity, the price on an exchange can jump to something else than $1. They are not fixed at a static $1. It's actually almost never exactly at $1 and the reason why it's immediately pegging back to $1 is because there is an arbitrage opportunity, assuming there is enoug…

The whole point of a stablecoin however is that it is supposed to be... stable. From tether.to:

"Tether tokens are referred to as stablecoins because they offer price stability as they are pegged to a fiat currency. This offers traders, merchants and funds a low volatility solution when exiting positions in the market.

All Tether tokens are pegged at 1-to-1 with a matching fiat currency (e.g., 1 USD₮ = 1 USD)"

$0.95 is not $1.00 and a 5% drop is not low volatility.

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