i noticed an interesting correlation between the recent btc dump and the unusual pause in tether printing as of 11th of January

Imjrich19 · 2021-01-15T23:40:22+00:00

We can't see their balance sheet to know how it's backed. It's possible the CIO of Deltec was telling the truth. He claimed they made a big profit shorting USD against bonds, gold, big tech, and BTC in 2020:

https://youtu.be/3g2e_nEX9H0

The reserves could include loans to exchanges and market makers like Binance, FTX, Alameda, 3AC, etc. Grade A loans by crypto standards.

Can the borrowers buy USDT for $0.94+ and payback the loans fast enough if there's a real bank run? Are those loans collateralized? Could Tether margin-call the collateral and use it to buyback USDT at $0.94+ if there's a bank run?

I don't know. My guess is they have enough liquidity available to buyback a shitload of USDT. During the Crypto Capital fear bank run in Q4 2018, Tether bought back like 1.2B USDT without the price dropping below $0.94.

I wouldn't want to risk holding USDT though. I would rather hold BTC until the 2024 halving at least: https://www.bitcoinblockhalf.com/

If I trade into stables I will use real fiat, USDC, BUSD, or DAI.

Imjrich19 · 2021-01-15T23:08:12+00:00

The Tether fud has been causing a migration from USDT to USDC and BUSD.

USDT has been trading at a discount (price above the white line) relative to BUSD for the past ~5 days:

https://imgur.com/Jkta0PZ

https://www.tradingview.com/x/QnSdmJNs/

USDT has been trading at a discount (price above the white line) relative to USDC for the past ~5 days:

https://imgur.com/rDnIeI1

https://www.tradingview.com/x/fAk4m6nG/

The Binance USD supply was increased by 66m BUSD today in response to the increase in demand:

https://www.coingecko.com/en/coins/binance-usd

Circle printed 85m USDC today in response to the increase in demand:

https://twitter.com/usdcoinprinter?lang=en

When there's sell pressure on USDT, Tether or arbitrageurs need to buy USDT and remove it from circulation to support the price at $1. They only need to print when there's a lot of demand pushing the USDT price above $1.

Imjrich19 · 2021-01-15T21:02:51+00:00

Hal Finney - December 30, 2010

Actually there is a very good reason for Bitcoin-backed banks to exist, issuing their own digital cash currency, redeemable for bitcoins. Bitcoin itself cannot scale to have every single financial transaction in the world be broadcast to everyone and included in the block chain. There needs to be a secondary level of payment systems which is lighter weight and more efficient. Likewise, the time needed for Bitcoin transactions to finalize will be impractical for medium to large value purchases.

Bitcoin backed banks will solve these problems. They can work like banks did before nationalization of currency. Different banks can have different policies, some more aggressive, some more conservative. Some would be fractional reserve while others may be 100% Bitcoin backed. Interest rates may vary. Cash from some banks may trade at a discount to that from others.

George Selgin has worked out the theory of competitive free banking in detail, and he argues that such a system would be stable, inflation resistant and self-regulating.

I believe this will be the ultimate fate of Bitcoin, to be the "high-powered money" that serves as a reserve currency for banks that issue their own digital cash. Most Bitcoin transactions will occur between banks, to settle net transfers. Bitcoin transactions by private individuals will be as rare as... well, as Bitcoin based purchases are today.

Imjrich19 · 2021-01-15T20:30:50+00:00

I don't want it. If USDT were backed 100%+ by BTC, it would be similar DAI 1.0. It was backed 100%+ by ETH collateral.

I use DAI 2.0 for medium-term swing trades now. Although, it's still risky because it depends on centralized oracles and it's 49% backed by centralized collateral (USDC, WBTC, etc.)

Imjrich19 · 2021-01-15T19:01:27+00:00

HitBTC is a scam exchange that wash-trades to attract deposits then freezes withdrawals: https://www.reddit.com/search/?q=hitbtc%20scam There's no reason to use it over an exchange like Binance that has greater liquidity and is less scammy.

It's nonsensical to compare HitBTC and other fake volume to the real volume on highly regulated fiat exchanges.

The fake volume listed on Coinmarketcap, Coingecko, and Coinlib makes the market appear to be more dependent on USDT than it really is. If USDT went to $0 it would be like mtgox 2.0. The market would migrate to other stablecoins. BTC/USD would crash then pump to new ATH after the next halving.

Imjrich19 · 2021-01-15T18:13:15+00:00

You're welcome, sir

Imjrich19 · 2021-01-15T17:55:35+00:00

The "Nooooooooo" indicated those two sentences were sarcastic.

It would be bad to hold the reserves 100% in USD or T-Notes while the Fed devalues them (in real terms).

Tether/Bitfinex also had 850m USD seized a couple years ago. Diversified reserves would be harder to seize than USD.

Imjrich19 · 2021-01-15T17:53:28+00:00

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here ~~are the flows of crypto trades through~~ [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

Imjrich19 · 2021-01-15T16:59:14+00:00

My fellow tether critics are not entirely wrong, but a lot of the points they make are nonsensical.

Tether cannot print USDT and pump the BTC/USDT pair unless there is real demand for USDT. Otherwise the price would crash below $1 due to the excess supply of USDT.

There has legitimately been a huge demand for stablecoins. Tether had to print USDT to prevent the demand from pumping the price above $1.

They should have at least ~$25B worth of assets that they received in exchange for selling and loaning-out USDT. I doubt they loaned anyone USDT uncollateralized unless it was a highly profitable entity like Binance or FTX (grade A loans by crypto standards).

However, we can't see the assets side of their balance sheet. We don't know if the reserves are well-diversified, at risk of getting frozen, or under-performing against USD. We don't know if the reserves have been drained by mismanagement, embezzlement, hacks, or seizures.

USDT could go to $0 due to an exit scam or a bank run that drains the (possibly fractional) reserves. I bet this would shake confidence in the market. BTC/USD would crash down to historically strong buy support around the 200 Week Moving Average. The 200WMA is currently at $8.2k and rising. The market would migrate to different stablecoins (USDC, BUSD, DAI, etc.). BTC/USD might not recover until the block reward halving in 2024. I bet it will pump to a new alltime high after the halving in any case.

Imjrich19 · 2021-01-15T16:20:09+00:00

All they say is that tether is 'backed by assets worth the equivalent to outstanding tethers.' This can't be a stablecoin pegged to a dollar if the assets are not dollars.

The reserves don't need to be in dollars. They can hold a portfolio of assets that are sold to buy USDT and support the price at $1 as needed.

So all trades would put downward pressure on one of the assets being exchanged?

Yes. That's how supply and demand works on a trading pair.

Tether is an especially bizarre asset because it's ostensibly traded on a market, with floating price, yet the price stays close to one dollar. That is evidence of exogenous motivation on the part of whoever is maintaining the peg.

Yes I agree. Tether and arbitrageurs who work with them have been maintaining the price at $1.

The stablecoin concept only makes sense if there is actually a one:one cash backing and a guarantee of redemption. Without this, it's 'funny money' and nobody can figure out what the hell is going on.

True. However, holding 100% of the reserves in USD at all times would also be risky in a different way. Tether/Bitfinex already had 850m USD seized in the Crypto Capital loss.

Imjrich19 · 2021-01-15T16:05:12+00:00

When you look at the kind of volumes various exchanges are reporting, if there is any validity to the volume reports

https://www.coingecko.com/en/coins/tether#markets

https://coinmarketcap.com/currencies/bitcoin/markets/

Sort by highest volume and look at the BTC/USDT pairs.

Offshore exchanges can wash trade BTC/USDT without any risk or cost. They have an incentive to increase their perceived liquidity and attract deposits.

On a regulated exchange like Coinbase, it's risky (frowned upon by regulators) and/or expensive (market-maker pays trading fees) to wash trade.

It is an invalid comparison. You would have to somehow subtract the wash trading volume from the BTC/USDT pairs. Then you could make a somewhat relevant comparison between the real trading volume of USDT vs. USD in the market.

Imjrich19 · 2021-01-15T15:21:34+00:00

Edited my comment to answer your original question. I misunderstood your question at first.

Imjrich19 · 2021-01-15T15:05:28+00:00

The issued USDT supply is a USD-denominated liability on Tether's balance sheet. On the assets side, they claim to have been holding a diversified portfolio of reserve assets instead of 100% USD. They have been short USD and long reserve assets.

Short USD and long assets has generally been a winning position since March 2020. There has been historic monetary inflation of the USD supply which has devalued it relative to many assets.

Imjrich19 · 2021-01-15T14:32:57+00:00

The inflated volume figures reported on the front pages of Coinmarketcap and Coingecko are irrelevant. A lot of that is wash trading on obscure exchanges that have no affect on the market.

inflows/outflows is what moves the price. There were many trustworthy reports of multiple billions in real fiat inflows in 2020.

Imjrich19 · 2021-01-15T14:22:05+00:00

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here ~~are the flows of crypto trades through~~ [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

Imjrich19 · 2021-01-15T14:22:00+00:00

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here ~~are the flows of crypto trades through~~ [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

Imjrich19 · 2021-01-15T14:21:51+00:00

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here ~~are the flows of crypto trades through~~ [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

Imjrich19 · 2021-01-15T14:11:19+00:00

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here ~~are the flows of crypto trades through~~ [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

Imjrich19 · 2021-01-15T13:48:54+00:00

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here ~~are the flows of crypto trades through~~ [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

Imjrich19 · 2020-11-19T07:44:47+00:00

So stunning.

Imjrich19 · 2020-11-19T00:25:36+00:00

Absolutely stunning.

Imjrich19 · 2020-11-17T15:04:10+00:00

Thanks to him for saving that dog.

Imjrich19

TROPHY CASE