What Effects Did the Tether Reserves Breakdown Have on Bitcoin and The Market?

bitgolden

legendary

Activity: 2772

Merit: 1128

Leading Crypto Sports Betting & Casino Platform

Quote from: bbc.reporter on March 20, 2022, 10:38:06 PM

~snipped

These type of deals could happen only because the logic of stablecoin is to be stable, so the risk is low because other side can't get much from you when it doesn't go down, it is expected to not go down. So, basically assume it this way, you pay 1 dollar for every month that it doesn't go down, but if one day it crashes you get paid 400 dollars instead. Why the difference?

That stability is the difference, you know that tether suppose to be stable and if you do not take that bet you accept it is not stable at all and could go down, many do accept it as stable so take that low bet. I am sure even if this fails, they won't lose too much so it is a good bet.

bbc.reporter

legendary

Activity: 2926

Merit: 1440

It appears the forum cave trolls' speculation on iFinex, Bitfinex, Tether, that they are holding commercial papers of Chinese real estate developers might be true. It might not only be true, this hedge fund has ordered a financial instrument to be created to short Tether. This is very much similar to when Michael Burry had a financial instrument created to short mortgage backed securities on 2007. Everyone thought he was crazy. Watch it in the movie The Big Short.

Christian Bale as Michael Burry in The Big Short

Hedge Fund Fir Tree Bets Big With Short of Stablecoin Tether

Fir Tree Capital Management is making a substantial short wager on Tether, the stablecoin that’s under intense scrutiny from regulators.

The $4 billion hedge fund, founded by Jeff Tannenbaum, constructed a way to short Tether in an asymmetric trade, meaning the downside risk is small and potential to make money is great, according to clients of the firm.

Fir Tree is betting that its short wager could see a payday within 12 months and its thesis against Tether centers around the coin’s roughly $24 billion in high-yield commercial paper, much of it the firm believes is tied to Chinese real estate developers.

China’s real estate sector is in crisis, led by China Evergrande Group, the world’s most indebted property developer that is heading toward a government-driven restructuring. While Tether has said it doesn’t own Evergrande paper, Fir Tree expects that some of the paper it does own will lose value, causing a potentially large drop in the reserves it holds, the investors said.

Source https://www.bloomberg.com/news/articles/2022-03-11/hedge-fund-fir-tree-bets-big-with-short-of-stablecoin-tether

bbc.reporter

legendary

Activity: 2926

Merit: 1440

@Pmalek. Much of the people might not have comprehended what is being argued or what created arguments are being made from the Biden administration’s statements hehe. Similar to the growth of casinos and internet gambling, the American government through policy, used the credit card companies to monitor and control how much comes in and how much comes out of the internet casinos. It might do this again on the cryptospace through policy and use the stablecoin issuers to control and monitor what comes in and out.

Pmalek

legendary

Activity: 2730

Merit: 7065

Farewell, Leo. You will be missed!

Quote from: bbc.reporter on November 02, 2021, 10:51:12 PM

Biden Administration to Congress: Put Stablecoins Under Federal Supervision – Or We Will

Centralized stablecoins like Tether can already do whatever they want with coins on exchanges or private wallets. Your coins can get frozen no matter where they are. Giving another party (like the US government) the same possibility of making decisions about which coins should get frozen is a potential threat for the future. But we already have decentralized stablecoins like DAI, they can't control those. I hope more people will turn their backs on Tether and pick safer alternatives.

Fundamentals Of

sr. member

Activity: 2310

Merit: 366

I think this is not the first breakdown that Tether released. I cannot remember how the first breakdown looked like but there might not be a big difference. So I don't think this is a big issue that will necessarily have an impact on Bitcoin. And also, Tether has been synonymous with controversy for several years already and yet Bitcoin remains solid and strong. In fact, even Tether still remains at the top even if it has been branded questionable by many crypto people.

bbc.reporter

legendary

Activity: 2926

Merit: 1440

It is speculated that similar to how the American government has used the credit card companies to have some control over the restrictions on gambling on the internet in their country, it might also use the stablecoin issuers to have some control over the cryptospace market.

Biden Administration to Congress: Put Stablecoins Under Federal Supervision – Or We Will

A group of U.S. regulators urged lawmakers to subject stablecoin issuers to the same strict federal oversight as banks, in a highly anticipated report released Monday.

Congress should also require custodial wallet providers to be regulated by a federal agency and limit stablecoin issuers’ interactions with non-financial companies such as tech or telecom providers, the President’s Working Group for Financial Markets said.

The report is part of an escalating effort by policymakers to rein in this $138 billion segment of the broader crypto market to mitigate the risks they believe stablecoins pose to consumers, markets and the financial system. Stablecoins, or cryptocurrencies pegged to the value of another asset such as the U.S. dollar, have seen explosive growth over the last two years despite lingering questions about their backing.

Source https://www.coindesk.com/policy/2021/11/01/biden-administration-to-congress-put-stablecoins-under-federal-supervision-or-we-will/

Where are those people who supported Biden in this forum?

bbc.reporter

legendary

Activity: 2926

Merit: 1440

Evergrande and other Chinese property developers commercial papers’ speculated connection with Tether are explained in this video. This is not assumed to be true, these are only speculations. However, the coincedences are everywhere.

https://youtu.be/zvR6nuTFF8c

el kaka22

legendary

Activity: 3500

Merit: 1162

www.Crypto.Games: Multiple coins, multiple games

I really do not care even if they show that they have 200% in their reserves to what they owe. At the end of the day we are giving our money to someone so they could offer us something that worths absolutely nothing. Normally people make these claims for bitcoin, it is not tangible and has no value, but bitcoin is not centralized and we decide how much it should worth.

If it is 43k today then we decided that it should be 43k, if it is 20k tomorrow it will be because we decided that, if one day it is 1 million dollars or zero then we all decided that. USDT is not like that, it is $1 sharp without any changes and Tether company decided that, which makes zero sense to me.

marine4u

full member

Activity: 673

Merit: 105

The breakdown of declining stablecoin reserves could represent a predictive action of accumulation that is engaging more in bitcoin and crypto. Most stablecoins are sitting right on the slots of exchanges. If the stablecoin indicators continue to fall, it is the reason I think the market will go up. Of course, I would ignore the Evergrande debt pump completely in this situation.

The possibility that we will have a new ATH if this is true and emerge after FUD China - Evergrande is very large

bbc.reporter

legendary

Activity: 2926

Merit: 1440

There have been hundreds of millions of USDT being sent to exchanges according to @Whalealert Twitter account, however, I speculate that it might not be to pump bitcoin. Check the peg USDT/USD. It appears that there is much selling of USDT to USD.

Kyraishi

hero member

Activity: 952

Merit: 513

I think that it is definitely something insidious like a cancer.

Fact of the matter is that this is precisely the fractional reserve that we have been warned against and were trying to get rid of with decentralized cryptos - but just reincarnated with blockchain technology.

It's a bit ridiculous given that a centralized body has this much leveraged over BTC prices over the short term just by issuing fiat tokens backed by nothing alone.

bbc.reporter

legendary

Activity: 2926

Merit: 1440

@adaseb. I reckon that we cannot be quite certain of anything. We cannot be certain that it will be similar to the Lehman Brothers, however, we also cannot be certain that it will not be similar to the Lehman Brothers. Many of the experts also did not expect the Lehman Brothers hehehehe.

This is another thread with much knowledge about the situation in China and Evergrande. The limit on leverage in China was not only on the cryptospace. It was on many sectors of their economy.

Evergrande: why most analysis is dead in water and how best to understand and navigate what’s happening? Both denialists and alarmists are getting it wrong. Let’s start by understanding this: what is happening is the result of a CCP-initiated policy change to curb leverage. 1/N

Source https://twitter.com/inartecarlodoss/status/1438944431734919175?s=21

adaseb

legendary

Activity: 3738

Merit: 1708

Quote from: bbc.reporter on September 20, 2021, 01:19:04 AM

The markets are presently dumping because of the fear that a contagion from Evergrande’s bankruptcy might cause the next financial crisis. If anyone does not read the news, google Evergrande, China news.

In any case, this thread on Twitter has a theory that Tether is holding commercial papers issued by Chinese real estate development companies similar to Evergrande. This might not be very bullish for the cryptospace.

https://twitter.com/thelastbearsta1/status/1418302465557110785?s=21

I’ve read that tweet back in July. While it’s possible it’s all speculation and no direct proof. Now whether Evergrande goes bankrupt or gets a bail out is not similar to the Lehman brothers back in 2008. Even if Lehman brothers got a bail out there would be a recession anyways.

I think everybody is trying to time the top of this stock market cycle and they use any news possible like this to mark the start of the bear market. However look at how many times in the past there was some event and people assumed the stock indices topped and they kept going higher and higher anyways.

bbc.reporter

legendary

Activity: 2926

Merit: 1440

The markets are presently dumping because of the fear that a contagion from Evergrande’s bankruptcy might cause the next financial crisis. If anyone does not read the news, google Evergrande, China news.

In any case, this thread on Twitter has a theory that Tether is holding commercial papers issued by Chinese real estate development companies similar to Evergrande. This might not be very bullish for the cryptospace.

https://twitter.com/thelastbearsta1/status/1418302465557110785?s=21

bbc.reporter

legendary

Activity: 2926

Merit: 1440

@magneto. It is not only defi that is dependent on them. It is the whole cryptospace. It can be argued that presently much of these stablecoins’ use case is to pump the market.

Also, yes, they will fractionalize and very easily. There are no regulators overlooking them.

magneto

hero member

Activity: 1666

Merit: 753

Quote from: Pmalek on June 06, 2021, 02:56:00 AM

Quote from: magneto on June 06, 2021, 01:49:04 AM

But this is scary for the stablecoin industry. Holders of these tokens need to understand that they are getting ripped off - being paid 0 interest and allowing Tether to nonetheless conduct fractional reserve.

bbc.reporter is right when he questioned how do the reserves of other stablecoin brands look like. Tether has been in the spotlight for years, but they are not the only ones that do business in dubious ways. I wonder what would happen if other stablecoins had to release similar reports about their financial assets, and what impact that would have on the market?

Indeed. I'm definitely not just talking about USDT here.

All of the stablecoins are or will enter a mode of fractional reserve sooner or later. Don't forget that Tether started out being fully backed 100% with USD reserves and nothing else - but transitioned quickly to investing with the funds when they realised people would use their service regardless as they have established themselves in the marketplace.

The stablecoin market is doomed, imo, and the fact that so many aspects of DeFi is dependent on this does not help whatsoever.

bbc.reporter

legendary

Activity: 2926

Merit: 1440

I am afraid the speculation that those commercial papers might be issued by some of the biggest exchanges in the cryptospace in exchange for a loan in Tether might be possible. Sam Bankman-Fried was asked a question if they issued commercial paper to receive Tether. His reply made it look that he was caught stealing a cookie hehehe. I like Sam, I also like FTX. However, this is discouraging.

If this is true, I only expected this on CZ and Binance or Justin Sun and Poloniex. FTX involved in this is very unexpected.

Source https://m.youtube.com/watch?v=dKHqw9p4xi4
10:51 of video

Pmalek

legendary

Activity: 2730

Merit: 7065

Farewell, Leo. You will be missed!

Quote from: magneto on June 06, 2021, 01:49:04 AM

But this is scary for the stablecoin industry. Holders of these tokens need to understand that they are getting ripped off - being paid 0 interest and allowing Tether to nonetheless conduct fractional reserve.

bbc.reporter is right when he questioned how do the reserves of other stablecoin brands look like. Tether has been in the spotlight for years, but they are not the only ones that do business in dubious ways. I wonder what would happen if other stablecoins had to release similar reports about their financial assets, and what impact that would have on the market?

magneto

hero member

Activity: 1666

Merit: 753

I think that this news should alarm Tether holders more than BTC holders.

BTC prices correcting from its ATH is merely a normal reaction due to the unsustainable growth that we have seen over the past few months. It is completely independent from the governance and reserve structure of USDT, no matter how much the media tries to convince you.

But this is scary for the stablecoin industry. Holders of these tokens need to understand that they are getting ripped off - being paid 0 interest and allowing Tether to nonetheless conduct fractional reserve.

Pmalek

legendary

Activity: 2730

Merit: 7065

Farewell, Leo. You will be missed!

Bump

Topic: What Effects Did the Tether Reserves Breakdown Have on Bitcoin and The Market? (Read 408 times)