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When Tether Blows Up

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Re: When Tether Blows Up

#51

Post by Animats »

panphora wrote: post #49

Tether was invented because crypto couldn't find legitimate outflows through traditional banking institutions. So, converting to fiat was impossible. Tether and other stable coins came along and said: we'll keep $1 USD for every token we have, so you don't need to cash out your crypto as fiat to see how much it's worth — just trade it for a stable coin! So, Bitcoin isn't actually worth $30k+, it's worth $30k+ in stab…

When the fiat inflows stop and instead try to reverse, it's going to be wild.

That started 3 weeks ago. See my post above.

Re: When Tether Blows Up

#52

Post by jcranmer »

MichaelBurge wrote: post #25
mattzito wrote: post #14

Earlier quoted context omitted.

“The markets can stay irrational longer than you can stay solvent” It’s hard to predict when things are going to fall apart. Archegos capital worked for quite a while until one day it didn’t.

> “The markets can stay irrational longer than you can stay solvent” I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks. Keep in mind hedge funds can manage billions of dollars, cryptocurrency market caps are manipulated and the true order book depth is much smaller, and many cryptocurrency people are trading 100x leveraged perpetual…

> I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks.

How would you do that? If you knew that Tether had, say, only $10 billion of assets backing it, you'd need to get 10 billion USDT and demand conversion to USD. If you bought those tether, well, it now has $20 billion of assets thanks to you and you lose. Borrowing seems risky, because the people you're borrowing from likely have a vested interest in Tether not collapsing and are going to work against you. So the only safe option is to convince people who hold 10 billion of USDT to cash out for USD pronto.

I will point out that the current drawdown of Tether is consistent with the scenario where liquid fiat assets are fast disappearing from the cryptocurrency ecosystems, and the cryptocurrency companies are fighting among themselves to claim as much of those assets as they can. (NB: There are likely other scenarios that are consistent with available evidence).

Re: When Tether Blows Up

#53

Post by tjader »

panphora wrote: post #49

Tether was invented because crypto couldn't find legitimate outflows through traditional banking institutions. So, converting to fiat was impossible. Tether and other stable coins came along and said: we'll keep $1 USD for every token we have, so you don't need to cash out your crypto as fiat to see how much it's worth — just trade it for a stable coin! So, Bitcoin isn't actually worth $30k+, it's worth $30k+ in stab…

> It's only connection to fiat is stable coins.

This is simply wrong. There are several exchanges that trade Bitcoin directly with fiat, even USD. It may not be a majority of volume, but it is significant.

Re: When Tether Blows Up

#54

Post by ahnick »

Animats wrote: post #46
Ologn wrote: post #39

Earlier quoted context omitted.

> HN posters have successfully predicted 9 out of the last 0 Tether blow ups. People predicting stock market declines have thus far been predicting something which declines and then eventually bounces back. This will not happen to Tether - when it blows up, like Mt. Gox, or a host of other crypto scams have - it will not be coming back. As someone else here said, markets can remain irrational longer than you or I can…

It collapsed because everyone started withdrawing their money at once, and then the whole house of cards collapsed. That may be happening to Tether now. Take a look at Tether's market cap chart.[1] Click on Overview->Market cap-> 1 month. You can see the cashouts. Between 5:09 AM and 5:14 AM on May 27, 2022, the market cap of USDT suddenly dropped by $750 million dollars. There have been five huge cashouts like that…

The Tether MC has been leveling off. (See the 1M view of MC on CoinMarketcap -> https://coinmarketcap.com/currencies/tether/)

While Tether may be technically insolvent there looks like there would need to be another $40 Billion in redemptions to really test the peg based on the latest attestation. (They had $82B MC & now have a $72B MC. Cash Equiv. - Comm. Paper & COD = $50B back in March).

My guess is they may have weathered the storm for now. Probably need a few more weeks to fully confirm, but high price today was .9995. If redemptions fully stop or MC goes back up slightly then peg probably returns.

Re: When Tether Blows Up

#55

Post by acchow »

SV_BubbleTime wrote: post #32
acchow wrote: post #26

I feel like Tether wanted to prove, once again, that the entire system is illusory anyway just like how the Bretton Woods system ended in 1971 (no more convertibility of USD into gold). As long as people use USD effectively, who cares whether or not it is backed by actual gold?

>As long as people use USD effectively, who cares whether or not it is backed by actual gold? Because unlike all crypto coin asserts, its backed with guns.

100% agree.

Re: When Tether Blows Up

#56

Post by arcticbull »

Tenoke wrote: post #30

HN posters have successfully predicted 9 out of the last 0 Tether blow ups. More seriously, it's mostly seething while reposting the same stuff with this article potentially holding the record for being short enough to not even repeat most of the usual let alone add anything compared to the pages and pages of previous posts on the topic[0]. Which doesn't mean it won't blow up, just that those discussions are particul…

Markopolos called 9 of the last 1 Madoff blowups, that didn't make him wrong at any point. This isn't helpful to the discourse, it simply shoves real red-ass flags under the rug and serves to legitimize the scam.

Watch this. [1]

[1] https://www.youtube.com/watch?v=kp5kv7aENxw

Re: When Tether Blows Up

#57

Post by projektfu »

jcranmer wrote: post #52
MichaelBurge wrote: post #25

Earlier quoted context omitted.

> “The markets can stay irrational longer than you can stay solvent” I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks. Keep in mind hedge funds can manage billions of dollars, cryptocurrency market caps are manipulated and the true order book depth is much smaller, and many cryptocurrency people are trading 100x leveraged perpetual…

> I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks. How would you do that? If you knew that Tether had, say, only $10 billion of assets backing it, you'd need to get 10 billion USDT and demand conversion to USD. If you bought those tether, well, it now has $20 billion of assets thanks to you and you lose. Borrowing seems risky, beca…

You could purchase millions in Bitcoin and other crypto, then sell it to a tether-based exchange for USDT. Then demand it as a withdrawal to USD. Rinse, repeat.

No idea how that would end up panning out but you don't necessarily have to accept new tether in exchange for your USD.

Re: When Tether Blows Up

#58

Post by [deleted] »

arcticbull wrote: post #56
Tenoke wrote: post #30

HN posters have successfully predicted 9 out of the last 0 Tether blow ups. More seriously, it's mostly seething while reposting the same stuff with this article potentially holding the record for being short enough to not even repeat most of the usual let alone add anything compared to the pages and pages of previous posts on the topic[0]. Which doesn't mean it won't blow up, just that those discussions are particul…

Markopolos called 9 of the last 1 Madoff blowups, that didn't make him wrong at any point. This isn't helpful to the discourse, it simply shoves real red-ass flags under the rug and serves to legitimize the scam. Watch this. [1] [1] https://www.youtube.com/watch?v=kp5kv7aENxw

[deleted]

Re: When Tether Blows Up

#59

Post by jcranmer »

projektfu wrote: post #57
jcranmer wrote: post #52

Earlier quoted context omitted.

> I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks. How would you do that? If you knew that Tether had, say, only $10 billion of assets backing it, you'd need to get 10 billion USDT and demand conversion to USD. If you bought those tether, well, it now has $20 billion of assets thanks to you and you lose. Borrowing seems risky, beca…

You could purchase millions in Bitcoin and other crypto, then sell it to a tether-based exchange for USDT. Then demand it as a withdrawal to USD. Rinse, repeat. No idea how that would end up panning out but you don't necessarily have to accept new tether in exchange for your USD.

The Bitcoin is still an asset they could sell for USD at a similar rate for what you acquired it for.

Re: When Tether Blows Up

#60

Post by [deleted] »

jcranmer wrote: post #52
MichaelBurge wrote: post #25

Earlier quoted context omitted.

> “The markets can stay irrational longer than you can stay solvent” I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks. Keep in mind hedge funds can manage billions of dollars, cryptocurrency market caps are manipulated and the true order book depth is much smaller, and many cryptocurrency people are trading 100x leveraged perpetual…

> I'm pretty sure if they had damning evidence, a single hedge fund could single-handedly force the market to collapse in a couple weeks. How would you do that? If you knew that Tether had, say, only $10 billion of assets backing it, you'd need to get 10 billion USDT and demand conversion to USD. If you bought those tether, well, it now has $20 billion of assets thanks to you and you lose. Borrowing seems risky, beca…

[deleted]
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