
The cryptocurrency market’s reliance on Tether is a recipe for disaster - kimsk112
https://medium.com/s/story/is-the-price-of-bitcoin-based-on-anything-at-all-8989790678e9
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drcode
I fully support articles that give individual investors advice to stay away
from tether (it is indeed a very shady product) but I fail to understand how
this is a disaster for the crypto markets.

If tether fails, cryptocurrencies may drop to a lower price- That is not a
"disaster", that is appropriate market behavior.

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duskwuff
The issue is that many exchanges have dropped out of direct
cryptocurrency/fiat trade -- if you have a FooBarCoin and you want to turn it
into USD, for instance, you will most likely have to convert it to Tether
before exchanging that for USD. A lot of trade between cryptocurrencies passes
through Tether as well.

If something catastrophic were to happen to Tether, it would have a
significant adverse effect on all cryptocurrency trade.

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drcode
I am not aware of even a single example of a FooBarCoin that can't be traded
either directly to either Bitcoin or Ether.

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mercer
Those are not fiat

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timbit42
They're also not Tether.

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andrewla
The reason that this doesn't scare me too much is that during the last crisis
(when the price of USDT dipped significantly) the price on most exchange was
unaffected, but Bitfinex and other USDT-based exchanges showed a significant
discount on the price of USD (manifested as a premium in BTC prices). So the
market is capable of assimilating information about the value of Bitfinex-held
USD (and thus USDT) without it having a price impact on Bitcoin (or other
cryptocurrencies).

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superkuh
The idea that the cryptocurrency market relies on tether is absurd. Everything
follows Bitcoin. Tether is an irrelevant scam.

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jeletonskelly
A majority of the trading volume and, thus, the apparent market liquidity is
in Tether. The problem with this is that Tether doesn't represent real
liquidity since there's no way to redeem Tethers to actual USD. Tether
currently represents a pool of USD that is trapped in the crypto market. This
makes the crypto market seem much deeper and wider than it really is. The only
Tether:USD market on Kraken doesn't have enough liquidity for a large
entry/exit.

~~~
dragontamer
> A majority of the trading volume and, thus, the apparent market liquidity is
> in Tether.

Well, the majority of trading volume on some exchanges, at least.

While coinbase-pro (formerly gdax) is relatively insulated, I can see that a
lot of Southeast-Asian exchanges collapsing when the Tether bubble finally
bursts... taking the BTC price down severely with it.

But with that being said: do you have any hard numbers for the amount of
trading volume that's tied to Tether? I've been looking for those numbers to
satisfy my curiousity. I suspect you're right that a large portion of the BTC
market is USDT trades instead of USD trades... but I never found exact numbers
on this subject.

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a-fried-egg
it's a laundromat

