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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

#301

Post by JCharante »

someotherperson wrote: post #62
adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere This is victim blaming. Nobody deserves to be exploited, robbed or otherwise for any reason.

If you knowingly put money in a scam where you send the previous person 2x the amount they sent and the music stops on you, you deserve it because you know the risk and choose it. So there is a line where it's acceptable to victim blame.

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

#303

Post by ThePhysicist »

Panzer04 wrote: post #298
ThePhysicist wrote: post #236

Earlier quoted context omitted.

In my understanding that process takes several days at least and the reimbursement is done at the leisure of Tether, so I'd wager a lot of panicked investors won't take the official redemption route (that only works for large sums as well) and try to sell on the market instead. Hard to say if Tether will still honor the redemption if the price falls below 0.50 USD, as they likely don't have enough reserves on hand an…

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 yet.

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

#304

Post by amelius »

shafyy wrote: post #55
adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

> If you've been honestly working on the assumption that it is, then you deserve to lose your (real) money to some crypto VCs on an island somewhere. The sad reality is that many poorer and financially illeterate people have been tricked by VCs and other grifters into this with billions of dollars spent in advertising. So, no, they don't deserve to lose their money to these assholes. These assholes need to be prosecu…

There should be a law that currencies are used for legitimate payments for more than X% and otherwise the currencies should be marked as gambling money. How to measure? I don't know, but I'm sure the IRS can come up with something.

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

#305

Post by pyinstallwoes »

phphphphp wrote: post #91
fastball wrote: post #47

Earlier quoted context omitted.

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.

Especially since it’s the primary form of liquidity.

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

#306

Post by thematrixturtle »

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.

That's a classic Taleb distribution, aka "picking up pennies in front of a steamroller".

https://en.wikipedia.org/wiki/Taleb_distribution

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

#307

Post by nevi-me »

This will be a defining moment for stablecoins, and will test whether Tether is truly backed by liquid assets to the $80bn equivalent.

The UST collapse will accellerate regulations, with Ms Yellen already commenting on stablecoins. More regulations will force USDT to show its hand with its assets, likely proving that it's technically insolvent.

That will collapse it.

What about USDC? As long as they act ethically, they need 1 'physical' dollar to mint 1 USDC. If USDT is backed by mostly air, then the USDT > USDC migration can't happen without actual reserves changing hands.

This likely means a crypto collapse, as more people will learn that value < money.

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

#308

Post by iso1210 »

EGreg wrote: post #73
adhesive_wombat wrote: post #30

The fact that they've been minting billions of tether without collateral should make it abundantly obvious that this isn't a stablecoin and never had been. Anyone can pretend to have a peg in the good times, that doesn't mean there's really a peg or that the peg will remain in bad times. And if you can't count on the peg in bad times, it's not a stablecoin. If you've been honestly working on the assumption that it is…

A year ago I advocated this “riskless” strategy on HN… if anyone actually listened to me, would you be up 1,000,000% right now? https://news.ycombinator.com/item?id=26106281

So how many billions did you make?

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

#309

Post by pyinstallwoes »

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…

Given that almost all of BTC’s daily exchange trade liquidity is based on having USDT and especially for margin… you best believe it’ll implode. Not to mention every other cryptocoin.

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

#310

Post by zwirbl »

bulbosaur123 wrote: post #275
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…

It wouldn't be a big deal, because people would just switch to USDC.

People are switching, as can easily be seen on the exchange rate graph.

But if the crash keeps getting bigger, will they get away?

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