Topic: What Effects Did the Tether Reserves Breakdown Have on Bitcoin and The Market? - page 3. (Read 509 times)

This is extremely disturbing. Cash makes up less than 4% of their reserves, at a time when the stock markets are deemed to be inflated. Apart from the 65% plus exposure to equities, there is another 24% plus exposure to fiduciary deposits. Now the term "fiduciary deposit" covers a wide range. Basically it is a deposit made on your behalf, by one financial institution on another. Now Tether hasn't given any details of the institutions involved here and therefore we can't calculate the absolute risk involved in this step.

In short, USDT reserves can't be trusted and I would advice the stablecoin users to shift to more reliable coins such as USDC.

The news that only about 70% of what they released is really backed up with fiat is old news, this was discussed back in 2017, and then something like that was confirmed in 2019 Tether Says Its USDT Stablecoin May Not Be Backed By Fiat Alone. The whole thing has been very clear about this for years, but has it influenced people to stop using this stable coin? Well, of course not, because all that matters to them is that they can make fast and cheap transactions, everything else is less important. So I think this news has almost no impact on what happened yesterday.

In the long run, I think that USDT is certainly a risk, as most stablecoins are actually in the gray zone, which allows their owners to print the quantities they need at some point - of course without covering with anything. Bitcoin is based on POW (Proof of work), and stablecoins on POFP (Proof of false promises) - and that's a huge difference.

Am afraid this is obviously true of Tether as I've seen similar thread from a cropped tweet on this revelation and it's really bad of Tether. I I can't say they played much of a role in this bear market observed lately but then, its so unfortunate to to bank our hopes on claims such as this. Tether is a coin where we run to bank our coins worth in times like this and it was or is really helping and for as many as those who uses there service's, I think they would continue to act ignorant of this claim as further reaction could result in the bankruptcy of Tether and the breakdown of the system. In my opinion, we could manage them for the while though, the risk it poses is the more high now than ever before.

Manipulators try to re-cook old things, of course, with some new spices for different times. Very generally

• The market can not rise if it does not have big falls previously.
• News are used adaptively with market trends.

With the bloodbath, the market has re-cooked news

• Energy
• Cryptocurrency ban in China
• Illegal use of Bitcoin for criminal activities
• Tether

The market will march onwards with a more prosperous price for Bitcoin, not instantly, of course it takes time.

Elon Musk and his negativity about bitcoin’s non-eco-friendly mining process gained plenty of media coverage this week. But something else happened a few days ago that certainly affected the whole market.

The stablecoin Tether published a report that shows their entire reserves breakdown until 31 March 2021.

This is how it looks:



We know that Tether has claimed that all of their USDT tokens are backed by actual cash deposits. Throughout the years, they have changed this claim to say different things, though. Looking at the pie charts they made public, we can see that their whole reserves aren’t backed up by cash and cash equivalents.

“Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper” take up 75.85% of their reserves. But how much of that is actually backed up by cash? According to the chart, only 3.87%.

The biggest reserves of over 65% are commercial papers. This category should represent some type of securities. According to the source, a similar type of commercial papers was part of the problem that led to the bankruptcy of Lehmann Brothers, which signalled the beginning of the financial crisis of 2008.

Wall Street investor Caitlin Long, who has defended Tether many times in the past, was critical of Tether’s choice of assets to keep as reserves. If Tether wanted to keep the risk for users as low as possible, she believes that government bonds would have been a much better choice. The commercial papers introduce a credit risk that could result in USDT no longer being pegged to the USD. Instead, Tether went for “commercial papers” to profit on the interest rates. According to the same source, a 1% interest would net the company a profit of $582 million annually.

If that is true, Tether makes money with the funds users invest when they buy USDT but leaves all the risks on the users by keeping inadequate reserves.


What is your opinion on this?
Is Tether cancer we have to get rid of for bitcoin and the crypto market to have a prosperous future?
How big of an impact do you think this Tether disclosure had on the recent downtrend of bitcoin and the whole market?


Source: https://bitcoinblog.de/2021/05/17/nicht-so-prickelnd-aber-auch-nicht-so-katastrophal-tether-veroffentlicht-zusammensetzung-seiner-reserven/