Topic: IF USDT would collapse what do you think will happen to the BTC price? (Read 1487 times)

Bitcoin existed without stablecoins and will exist even if they all disappear in an instant. Of course, stablecoins make it very easy to use cryptocurrencies, however, without them, Bitcoin and other cryptocurrencies will not die. Bitcoin is not directly related to stablecoins, but if something happens to tether, then in the first period this should affect its price, since everything in our world is interconnected. However, I find it difficult to even say in which direction - an increase or decrease, while the price of bitcoin will change.

If USDT will collapse, BTC and the general cryptomarket will follow. USDT already have the majority of the volume of all the stablecoin available right now and collapsing means most of the crypto user that holds USDT will be in a huge loss which means the buy power in cryptomarket will decrease dramatically.

We know that tether is a really shady company but they are not dumb to runaway with a billion dollar market that they are currently monopolizing. There profit here is consistent and huge.

It is not known whether this will actually be the case. And the collapse is a big question. Remember the time when USDT was already close to collapse, nothing happened.
Lawsuits against Bitfinex? It didn't work. Even if this happens now, we have many alternatives that can correct the situation to one degree or another.

The collapse of USDT will set the space back for at least two years, the money that is being used to pump BTC comes mainly from USDT and when the source of the fund is gone the house will collapse, I just hope Tether team settles their issue with SEC this year because USDT has done more good than bad for the space

Hey Guys

New here but not in the Space.

What's always annoying me about the whole Tether discussion is the fact that everybody that talks about the topic mostly assumes that if usdt collapses (not saying that it will) bitcoin would dump harder than ever before. While I can see that a lot of volume is through tether ( I would say its the majority) the collapse would by no mean be a small event. If you look back tho to end of 2018 when the whole Crypto Capital saga took place and usdt "dumped" into the .80s the only thing that really happened was that btc immediately spiked by a good amount simply because if you price btc/usdt if one collapses the other rises. So let's just assume that the day when tether would collapse actually comes and it's not just a few days of uncertainty. What side would win. A) everybody just want's to flee usdt (into btc) or B) everybody want's to flee crypto as a whole (through btc into "real usd" / coinbase)

The huge market cap of USDT should be the least of our worries, USDT has the combined volume of BTC and ETH, that should tell you how big it is and t makes sense, when people sell their crypto ideally they will like their fiat to go to their bank accounts, but with banks flagging and closing those accounts and taking days to get your money back to exchanges in which you can miss a big movement people prefer to use USDT instead so they can always jump back in the market and without it we will lose the best source of liquidity we have.

The huge market cap of USDT should be the least of our worries, USDT has the combined volume of BTC and ETH, that should tell you how big it is and t makes sense, when people sell their crypto ideally they will like their fiat to go to their bank accounts, but with banks flagging and closing those accounts and taking days to get your money back to exchanges in which you can miss a big movement people prefer to use USDT instead so they can always jump back in the market and without it we will lose the best source of liquidity we have.

USDT carries a huge marketcap, if something bad happens it will affect the whole crypto space big time but I'm sure bitcoin will be the first to recover, we can't deny the fact that Bitcoin is well adopted than others and some are even waiting for a golden opportunity to buy bitcoin for cheap price

They aren't claiming that anymore.  They haven't been for some time now.  I thought people knew that?

Well... here is the problem. If they use their reserve funds to purchase BTC, then how they can claim that USDT is fully backed up with USD?

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT and probably buying bitcoin with it, which made them richer than the amount they probably printed, but it also doesn't mean that they will end up with any legal problems neither. Even if they were delisted from all USA exchanges, it is still not going to crash the market too much.

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT

East Asia is the world’s largest cryptocurrency market, accounting for 31% of all cryptocurrency transacted in the last 12 months.

As we touched on above, stablecoin usage is especially high in East Asia, making up 33% of all value transacted on-chain. That share has been rising over the last few months though, with Tether — a popular stablecoin pegged to the U.S. dollar — actually beating out Bitcoin to be the most-received cryptocurrency by East Asia-based addresses in June 2020.

As we discussed in our 2019 APAC report, much of stablecoins’ popularity in East Asia stems from the Chinese government’s decision in 2017 to ban direct exchanges of yuan for cryptocurrency. As a result, Tether has become the de facto fiat stand-in for Chinese cryptocurrency users and primary means of on-ramping to Bitcoin and other standard cryptocurrencies. Though yuan-for-Tether trades are also not allowed under the ban, it’s common for users to buy Tether under the table from OTC brokers or through other means such as by using a foreign bank account. By using Tether as a fiat stand-in instead of, say, Bitcoin, traders can lock in gains without off-ramping into fiat by simply converting other currencies into Tether and leaving the Tether in their wallet or exchange account. Bitcoin, by contrast, has too much price volatility for this to be feasible.

While traders, specifically prop traders, represent Tether's primary use case, we have identified significant secondary use cases as well. Krishna Sriram at Quantstamp told us that ordinary users in emerging markets both in and out of East Asia use Tether as a means of value storage, as well as for cross-border remittances. As we’ll explore in greater detail later, some of those international payments may represent capital flight from countries like China. 

When we spoke to Dovey Wan about East Asia’s outsized Tether usage, she agreed the yuan trading ban was a major factor, and also pointed out Tether’s effectiveness for carrying out everyday transactions. “Tether has become a U.S. dollar replacement for many people in China. Lots of Chinese businesses and merchants, especially those working overseas, now accept Tether from customers,” she told us.

USDT is widely used in money laundering, gambling and other illegal activities, an executive at a blockchain platform told Caixin. In October, a local branch of the People's Bank of China in the southern Chinese city of Huizhou conducted mass arrests related to cross-border online gambling, the first crackdown on activities involving USDT. In a blog post, the central bank said 77 suspects were arrested for using USDT in cross-border transactions to launder gambling proceeds worth nearly 120 million yuan.

Most USDT transactions in the Huizhou case were made on Huobi, a Seychelles-based cryptocurrency exchange founded by Tsinghua University graduate and former Oracle engineer Leon Li. Online gambling sites use gamblers' funds to buy USDT on Huobi and then sell the cryptocurrency, thus "washing" the funds into legitimate cash flow, Huizhou police told Caixin.

Is this really the only concern that you have?

My concern would be that USDT is not backed. Even if they were backed my concern would be that they lied about being backed! This is a serious red flag that completely disqualifies USDT in my eyes.

I know that many people here think that since tether people were doing fine for the last 2 years they will continue to be and keep printing money indefinitely but it doesn't work like this!

Tether is also keeps all their money on bahamas, which means that bitfinex can't and won't deal with USA authorities, if SEC decides that USDT is an illegal thing, the worst thing that could happen would be the fact that they can't deal with american companies and that's it. You will not have usdt in places like Coinbase for example, but as long as it is out of USA you could still continue to work with USDT without a problem and they won't need to shut down or reimburse anyone at all.

However I still think the "demand" for USDT is not as high as they claim to be, they keep printing USDT and probably buying bitcoin with it, which made them richer than the amount they probably printed, but it also doesn't mean that they will end up with any legal problems neither. Even if they were delisted from all USA exchanges, it is still not going to crash the market too much.

Hey Guys

New here but not in the Space.

What's always annoying me about the whole Tether discussion is the fact that everybody that talks about the topic mostly assumes that if usdt collapses (not saying that it will) bitcoin would dump harder than ever before. While I can see that a lot of volume is through tether ( I would say its the majority) the collapse would by no mean be a small event. If you look back tho to end of 2018 when the whole Crypto Capital saga took place and usdt "dumped" into the .80s the only thing that really happened was that btc immediately spiked by a good amount simply because if you price btc/usdt if one collapses the other rises. So let's just assume that the day when tether would collapse actually comes and it's not just a few days of uncertainty. What side would win. A) everybody just want's to flee usdt (into btc) or B) everybody want's to flee crypto as a whole (through btc into "real usd" / coinbase)

First of all, Tether is just a token issued by the Bitfinex exchange. If the SEC classifies USDT as a security, then Bitfinex needs to take back all the USDT tokens and reimburse the users with actual US Dollar funds. This won't be difficult, as they already claims that 100% of their tokens are backed up with real assets. There is only a very small chance of SEC targeting Tether, but even if that happens there is not much to worry about.

The collapse of USDT will set the space back for at least two years, the money that is being used to pump BTC comes mainly from USDT and when the source of the fund is gone the house will collapse, I just hope Tether team settles their issue with SEC this year because USDT has done more good than bad for the space

One concern that I have for USDT is if the SEC would classify this stablecoin as a security. I know that they are possibly working on that case, but let’s just hope that SEC would not target USDT next. I know that XRP has gone down the wire because of their pending lawsuit from the US SEC, but USDT’s collapse would be total chaos for Bitcoin, Ethereum and other cryptocurrencies. 

But bitfinex already answered why USDT will not be targeted of SEC and its explain here https://cointelegraph.com/news/relax-tether-won-t-be-targeted-by-sec-says-bitfinex-cto/amp .