Yeah, in any given instance, "nothing happens" is true more likely than not. On the other hand, this is equally true in a game of Russian roulette. In both cases, "nothing ever happens" is not necessarily the right lesson to draw from the observation.
The nature of tail risk is that it seem completely impossible until, one fine day, it manifests explosively. Various other corners of crypto have recently been exposed to this lesson, often at some expense. It doesn't seem unreasonable to expect more damage to the ecosystem before the lesson is well and truly learned.
Maybe they have enough liquidity for it, since it’s their scam? I guess that FTT/Binance situation created an additional demand everywhere. The same depeg was observed after LUNA(?) news spread, afair, on a similar market.
There's almost $70 bn worth of USDT in the world. I don't believe Bitfinex has $70 bn of assets backing it. How much do they have? I dunno. But if there's a run we're gonna find out.
Note that treasury bills (and more so treasury bonds) have taken a beating with the increase in interest rates... so I wouldn't be surprised if they lost quite a bit there.
That's the question I had. Ostensibly, people are giving away a dollar for 98 cents right now. I'm confused about why anyone would want to do that unless they thought that tethered dollar isn't actually worth a real US dollar. If USDT is fine, seems like free money is on the table...
They are doing it because nobody has any idea whether USDT is fine except for Tether. So every time it de-pegs, rational people have to run towards the exit and take a loss, since nobody knows whether this is a temporary “Tether makes some bank on fear” incident, or if it’s the big one.
Stablecoin issuers have basically two jobs. One is to maintain the peg. But the really important job is to convince people that even if the peg temporarily breaks: the money is still there and it won’t be the start of a collapse. Tether does neither of these things. And worse: they have a financial incentive to sweep their customers into periodic panics, so they can buy up Tethers at a discount. Nobody should be anywhere near this ecosystem, and in a world where competing options exist it’s amazing to me that people are.
If you aren't sure Tether is good for it, why hold USDT at all? If you hold it, why sell it at every minute movement? That doesn't look like rational behavior, that looks like burning money. If you don't have risk tolerance or don't trust this asset - why own it at all?
I suspect some people are forced to because they don’t have access to fiat banking through their exchanges. So Tether is their only way to move and store “dollars”. I would hope that we’d see adoption of better US-regulated stablecoins (and we have) but Tether remains sticky around the world.
There are other stablecoins than Tether. And also, if you don't have any other options, what exactly you are selling USDT for? You must get something in exchange for it, not? So if you think that something is better, why didn't you use it at the first place? I could get it if it was a huge difference - USDT is at 0.50 or something - but if you sell at 0.995 then your preference for USDT was never that strong. For active money trader, it may make sense - if you manage billions, any tiny optimization in risk/reward can yield millions. But if we're talking about retail customer, it makes little sense.
Afaik there is no way for it to depeg, because they officially not allowing withdrawals, only for the "institutional investors" and at their discretion. You can't bankrun if the bank is closed and doors are barred :) .
Small fluctuations probably come from the single existing in the world USD-USDT pair on Kraken, with minimal liquidity, it's just there for fun I think.
That's an interesting observation. There's gotta be a pretty limited upper bound on redemptions because I know there is rather extensive KYC involved which 99% of Tether holders couldn't pass, high minimums, and country restrictions. If the 3% from treasuries on 60 billion dollars isn't enough to satisfy them then operating even at 80% reserve (which in the absence of leaks could probably go undetected for a very long time) would mean they stole about 12 billion dollars which should be enough many times over for a private jet, a whole new identity, extensive plastic surgery, and high ranking government officials of some Caribbean island in perpetuity.
These headlines come out every couple of months, nothing ever happens. In fact, odds are that Tether makes a bunch of money every time this happens.