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Bad news is that so many exchanges use it as it is such a useful instrument for users who wish to get out of crypto temporarily when their exchanges don't support fiat trading.

https://coinmarketcap.com/currencies/tether/#markets

People will use it until it gets burnt and crashed.




Tether is currently being traded around 99 cents. The market, so far, has assigned a 1% devaluation, despite this report showing that they basically lost $850M. From what I can see on Coinmarketcap, there is $2.83 Billion Tether in circulation.

So it would appear Tether has lost at least 30% of its assets (cash converted to Crypto Capital debt, which = toilet paper). I am shocked that people aren't taking this more seriously.


> Tether is currently being traded around 99 cents

Tether's "market price" is manipulated. People cannot exchange tether for dollars without jumping to another exchange.


Kraken, a US based exchange trades tethers for dollars. This is plainly incorrect.

https://trade.kraken.com/markets/kraken/usdt/usd


The price there seems to be sliding... currently showing $0.972.


Kraken has no volume. If a player were to sell 50 mill it wouldn't find a buyer.

There are billions of tethers in circulation.


1% fluctuation is normal. Tethering is stabilized through arbitrage.


The only way Tether can be stablized through "arbitrage" is if there is a risk-free way to trade 1 Tether for 1 USD.

For the average user, there is no direct way to cash out your Tether for 1:1 USD. I imagine that big clients do have the ability to trade Tether for USD. Because of that, they will buy up discounted Tethers on exchanges and redeem them to Tether Company for 1 USD each.

HOWEVER, this clearly relies on Tether Company providing that exchange. If Tether Company STOPS allowing the big guys to do this arbitrage, then suddenly the house of cards would collapse very quickly. The longer Tether stays below 1 USD, the more pressure is being put on their company by arbitrageurs.

Furthermore, we know that Tether has made a loan to Bitfinex for $900M. The Tether Company therefore only has cash on hand for about 2/3 of the outstanding Tether, assuming they had 1:1 reserves prior to lending cash to Bitfinex.


There are plenty of ways to arb without actual settlement to USD. Look up "statistical arb".

Even without stat, all you have to do is go USDT <> USD <> BTC or similar and take the arb across multiple pairs. It's a game of musical chairs until someone with enough cash decides to break the peg


Not true. You can trade USDT for USD on Kraken.


That's not arbitrage though. Kraken has a market rate. The only way to arbitrage the USDT / USD rate is if you have a reliable place to sell USDT at 1:1.


You can definitely use Kraken's market to arb:

- buy BTC with your USD on Coinbase Pro.

- sell your BTC into USDT on Binance.

- Sell your USDT back into USD on Kraken.

It really doesn't matter if the last step is 1:1 or another rate. If the price between Coinbase and Binance is big enough you can profitably arb this.


You are right, but it's a tiny market though.




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