I'm a USDT skeptic but a 2 cent deviation isn't much considering it has often deviated by more than that in the other direction. If it hits 90cents on the dollar I think things are serious.
There remains the possibility that Tether doesn't need to have the money in reserve (or not 100%, anyway). It can just conduct open-market operations to maintain parity: printing & selling Tether when USDT/USD is above parity, and buying & destroying Tether when it is below. This could even make for a very nice business model, as explained in this blog post:
https://kevinlawler.com/tether
Of course, the conclusion that Tether will stay solvent from profit motive does not concord with history: FDIC came around for a reason, and that reason was 30% of all banks started in the US ended in insolvency. Plus, there are obvious parallels with Black Wednesday:
https://en.wikipedia.org/wiki/Black_Wednesday
You can even short Tether on Kraken, although then you have to worry about counter-party risk through exchange insolvency.
As with any great Ponzi scheme, you have to pay some of your early investors to keep the thing going. But, at some point, you risk eating into your profits, so you just stop and everything collapses while you disappear to the island you bought with your stolen money.
If they want to keep going, they have to buy some USDT on Kraken to prop up the price. But, if they're done with the con and want to cash out...now might be when they do it. A few hundred million worth of various crypto assets is not a bad take.
> Isn't it more plausible that this is not someone writing a check for tethers (money coming in from outside the crypto ecosystem) but more likely it is coming from converting other cryptos into USDT?...
If they are selling because they can't access the normal withdrawal mechanism (e.g. US customers or people in a rush relative to processing delays) then it is the former. If they are speculatively shorting it is more likely the latter.
It could be both: people who can't do normal withdrawal and think there is at least 2% chance of fraud.
I don't have a position here and no axe to grind, but parting from your auditors is in many cases a significant red flag.
But still, I'm a skeptic too.
Tether deviated by 10 cents last May, and then it quickly recovered. Tether may have its issues, but this move alone tells us absolutely nothing. Saying that Tether is dying because of this move alone is absolute nonsense.
Such deviations can happen when one or a few whales take out their tens of millions of dollars out of Tether, or put their cryptocurrencies into Tether (that's when it rises by 5-10 cents).