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> Why wouldn't people sell?

Tether could be intervening in the markets and propping it up with reserves, similar to how banks prop up a stock for a while after IPO.

Or it could be that Tether market is still irrational. Everyone in the crypto space really wants a stablecoin that trades for a dollar. The number of people who trade and desire to have such a coin could outnumber the more rational market participants who say it's worthless.

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Exactly. That’s how pegs are maintained.

If Tether has full reserves, it makes sense for them to maintain the peg: buy Tethers at a 1%+ discount and cancel them ad nauseum.

I’m sure some desperate holders would even take a 10% haircut right now.

This is no different than a corporation’s treasury buying back its own stock and cancelling it.

Full reserves aren't required to maintain the peg, fractional reserves can work as well. However with fractional reserves there is a risk that the backer might lose money.

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