If Tether Group (owned by Bitfinex) just kept one USD in the bank for each Tether they minted I would not be writing this idea. It was the whole idea of the thing in the first place.
They have been investigated because it's not entirely clear that they do, but no one has ever exposed them completely, so one USDT is still one USD. Till today.
I have always been happy to say I will never have any USDT in my portfolio. This is because from what they have announced, they do not have one USD backing each USDT. They have a portfolio of "low-risk" assets instead, which they say is worth more than one USD. We don't know what they own.
In my opinion, this means they are now like any other 2B hedge fund, with YOU as the investor. There is a difference though.
If their portfolio out-performs the USD, as a lot of hedge funds do (it's kind of basic, actually being able to make money from investing in stuff) they can keep the proceeds. After all, they only need enough USD to back the USDT in circulation, so if they are making money with their hedge fund trading, then they keep it. (You don't get any of it).
If their investments/trades go to hell in a handbasket then USDT goes down along with the NAV of their portfolio.
Today's price action makes me feel that this is not an attempt to smash USDT like LUNA. No, it is subtly different.
What did they invest in? We don't know. Was there any Crypto in their portfolio. We don't know but if so they have lost a lot of money... What about stocks? They look bad too.
When markets get this shaky, some hedge funds fail. Is this one going to fail?
It is a puzzle, especially on the back of the LUNA/UST problems. It will be interesting to see/hear what the moonboi dickheads have to say.
I have been thinking about this since 7am. Even with 40+ years experience, I cannot figure out how we have managed to end up in a potential cascade. There is a lot going on in the world from war to inflation to uncertain stock markets - red everywhere. All markets are having difficulties. Crypto, by responding to world affairs, is showing it is gaining acceptance.
The fix is 'simple' - back the USDT with hard cash.
The how and why are giving me a headache. No group of people would benefit from chaos that could potentially be unstoppable.
Ergo, it is a set of "extremely unusual circumstances" (just need some Lemon) - a fluke that is just some bad luck. The market will recover.
THERE IS NO NEED TO PANIC. Take advantage and buy. DCA down your HODL bag....take advantage of these low prices now......and, if we are lucky again when we get to the mid 20's for BTC (23K bottom? I prefer 26k area).
onosejun
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@esorlegin, "No group of people would benefit from chaos" This is just not true. Lots of people, especially some hedge funds makes huge money by manipulating price of anything. And I am thinking that FTX made futures pair of all stable coins have something to do with recent drama.
esorlegin
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@onosejun, you need to understand the whole statement - " xxx potentially unstoppable " Market manipulation happens in crypto. Hedge funds do benefit for risk managed chaos. No One benefits if things get out of control (BTW - I was in fund management for a number of years)
Oacen
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get out of tether better safe than sorry
winforyou
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LUNA - UST was crushed because the company was super clear on what they own and what's backing the UST. Big short people exploited this and made a plan to short which they succeeded. Now UST and LUNA is screwed along with many many retail investors. USDT - Bitfinex not disclosing all info kind of protects them attackers are unsure where to hit, BUT I agree this unknown asset backing USDT does not give us confidence to keep our asset in long term. USDT could certainly crash especially most governments want their Central Bank coin in circulation and wants to kill all "stable coin" for obvious reasons of control. Hmmm truly nowhere to hide. Scary.
QuantumRoseJ
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Thanks for the explanation, I was wondering why USDT going down today. Do you have any news links regarding Tether under investigation?
Paul_Varcoe
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@chujiarui666, no new investigation that I know of.
esorlegin
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@chujiarui666, logic says that Bitfinex have stock market investments used to back their commitment to USDT. The wide fall is stocks would have TEMPORARILY weakened their position. Now, they will simply add funds the the USDT fund to regain the stable peg position. The crypto industry has the funds to protect the crypto market and stabilise the USDT. Do not panic.
@esorlegin, I really hope crypto market has more funds to keep itswlf alive! And I for one would like to see at least one USD tathered stable coin. (A haven for unrealized gain in my use and convenience of quick trading)
What's your take on Elon-Cathie gang's continuation of BTC ETH pump?
It will be interesting to see/hear what the moonboi dickheads have to say.
I have been thinking about this since 7am. Even with 40+ years experience, I cannot figure out how we have managed to end up in a potential cascade.
There is a lot going on in the world from war to inflation to uncertain stock markets - red everywhere. All markets are having difficulties. Crypto, by responding to world affairs, is showing it is gaining acceptance.
The fix is 'simple' - back the USDT with hard cash.
The how and why are giving me a headache.
No group of people would benefit from chaos that could potentially be unstoppable.
Ergo, it is a set of "extremely unusual circumstances" (just need some Lemon) - a fluke that is just some bad luck. The market will recover.
THERE IS NO NEED TO PANIC. Take advantage and buy. DCA down your HODL bag....take advantage of these low prices now......and, if we are lucky again when we get to the mid 20's for BTC (23K bottom? I prefer 26k area).