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Tether starting to lose its peg too, after Terra did

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

#421

Post by h2odragon »

mwill wrote: post #191
thematrixturtle wrote: post #76

It's hard to overemphasize how big a deal the Tether peg breaking would be (is?). At $78B, it dwarfs UST/Terra, and it's supposed to be an asset-backed stablecoin, not a risky algorithmic boondoggle like UST. If Tether plunges, it will take the broader crypto markets with it. Emphasis on the "supposed to be", since many, many, many unanswered questions have been raised about Tether's reserves and they've previously b…

Do people in crypto sincerely believe Tether is backed? I'm not being sarcastic here, I'm genuinely asking. I'm a bit of a skeptic of how the crypto market has developed overall, and the intentions of the major players, so I keep reminding myself that I'm biased, but I haven't believed Tether is even remotely close to being fully backed for a long while, and I've just sort of assumed everyone who's 'bought in' to the…

There are people "in crypto" who believe the FDIC will make good any losses on their investments; which they hold because "crypto can't be controlled or monitored by governments!"

I'm expecting the talking heads to have to spend time on "why there won't be a bitcoin bailout" today or tomorrow.

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

#422

Post by can16358p »

vidarh wrote: post #248
kristopolous wrote: post #164

Earlier quoted context omitted.

If it was I'd honestly pull back. Cryptocurrency has a future and Bitcoin is as necessarily part of it as much as Netscape and Yahoo were necessary for the web. (Or US robotics and compuserve, pick your loser) The thing itself can survive the collapse of the current winners.

That is a possibility, but I think the point is that if BTC was $2k tomorrow, then whether or not it survives in the long term, it seems highly unlikely to at least some of us that it wouldn't bounce back to substantially above $2k again whatever it's long term fate is. It's a gamble, and I certainly wouldn't put money I can't afford to lose on it, but at some threshold the potential upside becomes significant enough…

Regardless of the value of Bitcoin, anyone should ALWAYS only invest (or gamble, in one sense) amounts that they can afford to lose.

I don't know why anyone does otherwise.

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

#423

Post by DebtDeflation »

jiggawatts wrote: post #361
pjc50 wrote: post #349

Earlier quoted context omitted.

The billions of dollars of _backing_ should show up somewhere. https://twitter.com/dsquareddigest/status/140291428628503347... > again - who is on the CP desk at Tether? Who is their account manager at Goldman Sachs? Who do they talk to at, say, the GE corporate treasury? Commercial paper is a short term money market that has to be managed and rolled - you can't just buy and hold the bonds anonymously. Dan's argument…

From what I heard, Tether had invested heavily in "emerging markets" instead of the established US markets, which explains why nobody at Goldman Sachs has dealt with them.

Only if by "emerging markets" you mean Binance (and other crypto companies). Because that is almost certainly the source of any CP that Tether holds.

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

#424

Post by cercatrova »

tluyben2 wrote: post #112
sshine wrote: post #71

Earlier quoted context omitted.

> many poorer and financially illeterate people have been tricked I’m sorry, but it’s worse than that. Whenever I’ve said “Tether is a scam waiting to blow up, and the evidence is obvious”, none of my smart peers had anything to say, either. The BTC price is hells high by this fake USD money printer. At least people are collectively waking up. Brrrr.

The religious (for a lack of better word as it is a religion to believe that cryptocurrencies are inherently better than other assets (outside NFTs) but they do believe that if you read twitter/reddit) people are hodling but all the 'saner' people I know went out in december. There was enough writing on the wall to know that 2022 would not be a good year for some assets (and it's just beginning). Only the real believ…

I have a hard time feeling sorry for these people. Sure, they may have gambling tendencies, but at some point, one must reckon with the consequences of their actions, and reap what they sow.

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

#425

Post by FabHK »

t0mas88 wrote: post #400
vintermann wrote: post #174

Earlier quoted context omitted.

But they get to buy and sell tethers themselves, right? If a T costs less than a dollar, and Tether's owners know that it's perfectly backed by a liquid dollar, why don't THEY buy it? If they don't, it suggests it's not, and they actually agree it's worth less than a dollar.

Maybe they are buying them? Just not at enough speed to avoid a decrease in price. To buy them they would need to take their real USD, probably spread across investment instruments (e.g. in an ideal case where all they say is true, they would sell some government bonds they're holding), and bring it to an exchange where USDT is below 1 dollar. Then on that exchange they would go and buy, and make a small profit. Base…

There are rumours, for example, that quite some of Tether's reserves are in bonds (treasuries etc.) or commercial paper. There is secondary market for bonds and even commercial paper, but it is rather slow (OTC, not on an exchange), and if you need to sell bonds or paper in distress, guess what sort of price you're going to get...

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

#426

Post by ttty »

22c wrote: post #194
Animats wrote: post #180

Tether is back up to around $0.98, but volume is high. Somebody is pouring cash into Tether to support the price. Similar over at UST. Price is back up to $0.60, but volume is far above normal. Remember, with a stablecoin, there is no upside to holding . Any indication of risk means it's time to get out. Even if Tether has enough reserves to get the price back to $1, there will be substantial cashing out. That's why…

https://twitter.com/tether_to/status/1524652531170881537 Surely this is related

That was announced like 40 minutes after the crash… doesn’t make sense

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

#427

Post by t0mas88 »

ThePhysicist wrote: post #303
Panzer04 wrote: post #298

Earlier quoted context omitted.

If the price continues to fall and they can keep arbitraging, they could easily do quite well out of this (assuming they have a reasonable amount of reserves).

Yes, if they can make good on their promise (which I'm very doubtful about). Large holders of Tether have only downside risk now and speculators don't have much to win, so the market should mostly exert heavy downward pressure on Tether. I guess it comes down to whether the large exchanges will be willing to bail them out, which they might just do as Tether is too big to fail and no one wants the crypto party to end…

Every USDT they buy below 1 USD will increase their "backing level". So if they only stole let's say 5% of the funds to buy cars and boats, a price drop could slowly move them back to 100% backed.

Assuming they have all the USD somewhere, but locked in all kinds of instruments (bonds etc) they would not be able to pay out without rapidly increasing wait times. And that will drop the price more and more because it increases doubts on whether they really have the USD.

That drop further incentivizes them to use the USD that they do have quick access to to buy USDT on the market instead of pay-out their 1:1 redemption option. Which will increase the wait time even more and thus drop the price even further as USDT holders get spooked.

But in most of those scenarios the guys behind Thether will make a lot of money.

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

#428

Post by FabHK »

legulere wrote: post #201
turtledove wrote: post #59

Earlier quoted context omitted.

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.

Yes, until they run out of cash and you sit on worthless tether.

AKA bank run.

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

#429

Post by adastra22 »

sdgdfgsfdfgsdfg wrote: post #230
Animats wrote: post #180

Tether is back up to around $0.98, but volume is high. Somebody is pouring cash into Tether to support the price. Similar over at UST. Price is back up to $0.60, but volume is far above normal. Remember, with a stablecoin, there is no upside to holding . Any indication of risk means it's time to get out. Even if Tether has enough reserves to get the price back to $1, there will be substantial cashing out. That's why…

The high buy volume at $0.98 is due to arbitrage. This is to be expected before the final crash. People are using the opportunity to net an instant 2% return. Buy $10M USDT at $0.98, redeem at Tether for $1, take home $200K of profit instantly. Thing is, this will only last until Tether runs out of liquidity. Then all bets are off.

> redeem at Tether

Find me one person that has ever done this. Just one.

I will wait.

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

#430

Post by draw_down »

myle wrote: post #198
davidweatherall wrote: post #189

Earlier quoted context omitted.

I don't understand how you bodge a stable coin startup. Surely you just mint the tokens in exchange for dollars, and then put ~50% of the dollars in zero risk investments (some form of treasury bonds), and then take the 0.5-1% interest per year as your revenue. Tether currently has $81b marketcap so you could be making $400-800m per year doing basically nothing?

Greediness.

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