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Comment by mattcaldwell | Hacker News Reader

Tether's market cap is around $2b... the crypto market as a whole clocks in at over $500b right now... what kind of effect could Tether really have, beyond the inevitable panic that will ensue?

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The world economy was much larger than the market for US mortgage bonds, but when US mortgage bonds failed, the entire world economy tanked. It's not about relative sizes, it's about how intertwined the relationships are.

The fallacy around marketcap is well explained the above post. Or check the link:

https://news.ycombinator.com/item?id=16279591

That doesn't actually apply here, does it? If $2B is an inflated market cap, that's good for everyone.

The idea presented in the post is simple - marketcap is based on the last trade. So it is an unreliable indicator.

True measure might be something like liqudity and exits. What happens if the liquidity shifts or exits to fiat disappear completely? Like I pointed out, currently USDT is connected to 15% of liquidity in BTC:

https://news.ycombinator.com/item?id=16279642

Or as MekaiGS said the whole thing will depend on exits:

https://news.ycombinator.com/item?id=16279618

I'll agree that the whole thing will depend on exits.

So currently the same as:

Bitcoin gold -- a questionable bitcoin fork.

OmiseGo -- Soemthing I've actually never heard of, despite following cryptocurrencies pretty closely.

If OmiseGo, or Bitcoin Gold ended up being a scam, would the market even notice?

Look at trade volume. Last time I checked tether was 10% of worldwide trade volume.

That's huge. If this volume is based on fake dollars then I think the entire space could be massively inflated.

That doesn't surprise me, since Bitfinex is using it as the base for their primary trading pair.

Market cap is not the same as actual money that has flowed into the space. Tether claims that 2B actual USD exist in reserves.

Actually, they claimed that they have "sufficient resources" to back the 2B.

Small amounts of money can have outsized effect on a market if it’s thinly traded, which crypto markets tend to be.

Volume of trades from exchanges show that daily 5% of the market cap is traded. (About $25 billion traded vs $500 billion market cap) How does this compare to Apple or another large stock?

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