I was reading this morning my local MSM newspaper an article about bitcoin, and one thing it pointed was the shady nature of price formation for the asset. According to this pundit, the obscure market conditions with unknown actors manipulating price, together with the Terra collapse, and the interest rates rising etc. all pointed to more downward pressure. I try to read as much anti-bitcoin articles as I can in order to keep some balance out of my echo chamber, and stay alert to possible unseen failures of this system. But I couldn't but agree with part of what he pointed out.
As I understand, the latest price action was supposedly due to the Terra/Luna collapse, but it is not clear to me if it was the case, but let's suppose it was. If the Terra ponzi was something around 40B size andBTCUSD dropped some 20%, what would happen with Tether that has around 72B market cap and is clearly involved in criminal actions? WIll price drop another 30 or 40% when they collapse? I'm still not sure why everyone shudders "the tether fud" as if it was something made out. These scams should be erradicated and we are all responsible for cleaning the space and separating the wheat from the chaff.
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20 sats \ 1 reply \ @siggy47 5 Jun 2022
Well, a couple of things:
- Regarding price manipulation, this exists in all markets. Look what happened earlier this year with the London Metals Exchange https://www.forexfraud.com/news/metals-exchange-suspends-trading-and-cancels-billions-of-dollars-of-trades/ The gold market has been manipulated by central banks and their proxies for years https://www.reuters.com/article/jp-morgan-spoofing-penalty-idINKBN26K325
Ditto US Treasuries https://www.justice.gov/opa/pr/former-bank-employee-pleads-guilty-manipulating-us-treasury-securities-prices
And who can forget last year's Robinhood meme stock mess?
2. Bitcoin supporters have no control over tether, and I agree the bitcoin price would be negatively impacted if tether lost its peg. However, the situation with tether is fundamentally different than UST in that tether is not backed by bitcoin.
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20 sats \ 0 replies \ @purpurato OP 5 Jun 2022
That's what I thought regarding price maniuplation, bitcoin is not the exception, and most markets are prone to that. But the fact that most of the trading is done via tether shows how supportive the whole system is regarding that particular stablecoin. I guess all this can be summarized with the ole' "not your keys, not your coins". Keeping BTC at centralized exchanges is very risky.
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10 sats \ 0 replies \ @cryptocoin 5 Jun 2022
I have no qualms about trusting Tether for something like accepting it as payment method for a P2P trade. I don't hold that Tether for long ,... and will transfer that to my exchange, or use it with a swap service, or whatever, and either move that value into fiat or use it to buy bitcoin.
But using Tether as some type of store of value, makes no sense to me, when I have a bank (for fiat). I can see, however, how those without access to a bank (e.g., in developing countries), Tether provides a dollar-stable token that us useful as both a payment method and a store of value. They are trusting it because their other options are worse.
As far as the Tether currency stock being so large (e.g., more than 10% of the value of bitcoin), it's unlikely Tether is going to be dumping bitcoin (like Tarra ponzi reportedly did) to support their peg. I don't even know if they have bitcoin in their reserves (nobody knows, they don't share publicly the components of their reserves).
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10 sats \ 1 reply \ @BlokchainB 5 Jun 2022
Coffeezilla did a video about this
It seems like a lot of big money players are redeeming tethers for USD. (I think $10B at the time of the video) and the peg dipped but it wasn’t completely blown up yet. I think it’s a nice video to watch to see why people are so skeptical on tether
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10 sats \ 0 replies \ @purpurato OP 5 Jun 2022
Your link is to some tweet, but I'm checking coffeezilla's video, quite good, would gladly send some sats to him but don't see how.
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0 sats \ 2 replies \ @KingZing 5 Jun 2022
What Tether FUD are you specifically talking about? What criminal actions?
If Tether get hit then the entire crypto market would crash far more than 30-40% imo. But I don't see that happening, I think I saw Japan/UK both making a move to legitimize stablecoins few days ago.
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0 sats \ 1 reply \ @purpurato OP 5 Jun 2022
They paid a fine already https://www.cnbc.com/2021/02/23/tether-bitfinex-reach-settlement-with-new-york-attorney-general.html to end the probe. And there has never been an audit on the assets backing the peg. No one has gone to jail, but make up your mind with the info available.
Here's another one https://cryptocurrencynewsroom.com/what-we-know-about-the-bitfinex-tether-scandal/ The peg will be lost eventually.
I think the move you say in Japan/UK goes towards allowing banks work on those stablecoins and excluding other actors.
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0 sats \ 0 replies \ @KingZing 5 Jun 2022
The FUD against the peg is largely exaggerated imo.
Tether does have transparency report and the treasury attested by third party auditor, though there are concern since the specifics of what investments they do are not given.
In fact the latest attest report shows they are even OVER collateralised and have great liquidity.
https://blockmagnates.com/tether-usdt-is-overcollateralized-with-over-82-billion-in-reserves/
That being said, the marketcap for USDC is catching up and should diversify this risk a little over time.
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