Bitcoin is the real stable coin. Everything else is fluctuating in price discovery until hyperbitcoinization completes.
It's only stable at gowing downward
Was just going to say that about the purchasing power of USD.
Tether Required Recapitalization in May 2022
31–40 of 336 posts
Re: Tether Required Recapitalization in May 2022
#32The most important point in this article is that whether Tether is fully collateralized ultimately doesn't matter. As long as there are well-capitalized parties (Bitfinex, other exchanges) that want to prop up Tether, it will be fine. Nobody should be under the illusion that Tether is decentralized or anything other than a bet on Bitfinex.
You have to predict what those well-capitalized parties will do during a market panic. Decision making seems to change quickly when half the money has just disappeared, to focus on salvaging as much as possible.
Exactly. It's not whether Bitfinex is able to prop it up, it's whether Bitfinex thinks Tether can be propped up without too much expense. At a certain point it no longer becomes worth propping up, and that number is very far from the current $74B market cap it's currently at.
Re: Tether Required Recapitalization in May 2022
#33I think Tether is the ultimate "Fake it till you make it" organization in crypto. Its kind of a joke now but everyone is in on the joke but it will probably end up being the defacto crypto parking place once things get real in crypto (e.g. you can buy a house with it) and the adults come in and shake out the current management.
> once things get real in crypto (e.g. you can buy a house with it)
it feels odd to speak about this scenario like it's a foregone conclusion.
Re: Tether Required Recapitalization in May 2022
#34I think Tether is the ultimate "Fake it till you make it" organization in crypto. Its kind of a joke now but everyone is in on the joke but it will probably end up being the defacto crypto parking place once things get real in crypto (e.g. you can buy a house with it) and the adults come in and shake out the current management.
It's not a matter of being a joke. It's a matter of being criminals.
Besides, Coinbase/Circle is already miles ahead in this race for institutional credibility.
Re: Tether Required Recapitalization in May 2022
#35So Tether is doing something akin to fractional reserve banking? From what I understand, this shouldn’t cause a problem unless there is a massive run (everyone trying to convert their USDT into dollars at the same time). Since most of the USDT is owned by big exchanges who need it to provide liquidity and have no interest in crashing the crypto market, I don’t think this is likely to happen.
The problem is that 'unless there is a massive run' is nearly assured over a long enough time horizon. The fact that the major players know that they are reasonably safe unless there's a run is the thing that will cause a run in a panic. Also, if some well-capitalized hedge fund figures out how to attack it, they might also light the match on a run if there's money to be made in killing it.
Re: Tether Required Recapitalization in May 2022
#36Is this what the earlier "hash drop" tweet [0] was about? [0] https://twitter.com/patio11/status/1527616238586716160
Yes.
Re: Tether Required Recapitalization in May 2022
#37What happens if Tether fails, realistically? There's a lot of doomsaying around it, but after seeing the crypto market shrug off the loss of Terra Luna without contagion or bailout ala GFC crisis, the fear may be overblown. Terra was backed entirely by hot air, whereas Tether is mostly backed. Wouldn't the net loss be similar or even less?
It is one step closer to shutting the doors on Bitcoin as an isolated financial ecosystem. Bitcoin-to-actual-USD is a trackable / taxable event. Whales avoid it like the plague. By moving to a pseudo-dollar like Tether, market makers can hang out while they wait for a suspect better buy-in price in the future. Should pseudo-dollars go way, they actual-Dollar transactions get a taxable haircut. Additionally, the frict…
Aren't sales of Bitcoin for Tether taxable anyway?
Re: Tether Required Recapitalization in May 2022
#38I think Tether is the ultimate "Fake it till you make it" organization in crypto. Its kind of a joke now but everyone is in on the joke but it will probably end up being the defacto crypto parking place once things get real in crypto (e.g. you can buy a house with it) and the adults come in and shake out the current management.
> once things get real in crypto (e.g. you can buy a house with it) it feels odd to speak about this scenario like it's a foregone conclusion.
No kidding. Crypto is deeply unpopular with a significant portion of the public - myself included. This is not the same as the early era of smartphones where you either had one or didn't really know much about them (i.e. were neutral). Many people have made up their minds on the utility (or lack thereof) of crypto and want nothing to do with it. Some of the recent incidents of backlash around NFTs in games come to mind.
Re: Tether Required Recapitalization in May 2022
#39> As of this writing, on May 20th, it has yet to regain the peg This is misleading. Tether has consistently traded between $0.998 and $0.999 between May 13th and May 20th. See https://coinmarketcap.com/currencies/tether/ Is it trading at 0.1% lower than it was before the Terra USD collapse? Yes. Has it "lost its peg"? No.
Eh, that just comes down to the arbitrary definition of how much of a discount you consider "losing the peg". Sidestepping the definitional issue, I certainly worry when a pegged asset trades at a persistent discount, even a small one, when it didn't before. A stablecoin should generally trade at a premium just as often as it trades at a discount. When one goes long periods without ever being above, that is a strong…
Before you thought Tether was unable to hold a peg why would you be long Tether? Isn’t it better to just be long the USD?
Re: Tether Required Recapitalization in May 2022
#40The most important point in this article is that whether Tether is fully collateralized ultimately doesn't matter. As long as there are well-capitalized parties (Bitfinex, other exchanges) that want to prop up Tether, it will be fine. Nobody should be under the illusion that Tether is decentralized or anything other than a bet on Bitfinex.
It matters deeply. Neither Bitfinex nor any other exchanges are required to rescue Tether. Additionally, these other exchanges may not have the collateral to rescue Tether in a simultaneous market and crypto downturn.
This is a ticking bomb.