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Comment by dragontamer | Hacker News Reader

> Disclaimer: I have short positions on the cryptocurrency ecosystem, through MSTR and COIN puts

Not a good way to start the article. I think Tether can crash without affecting MSTR or COIN, for example. A short on GBTC might be more obvious connection. But... that's another article for sure.

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Otherwise, the news on Tether's sketchy drum has been beaten for almost 5 years now, at least by my own memory. Tether could very easily survive this most recent crash by... whatever mysterious means its survived before.

This blogpost adds a $18,000 BTC price as the time they think everything falls apart. An interesting theory. Maybe we'll get there in a few weeks and see if the theory bears any fruit. Its an objective price point for sure, so its an easy one to test if the price shifts lower in the future.

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At least they're disclosing their stake, it's more honest that most people putting out hokum about crypto.

Oh yeah. I appreciate them disclosing their stake. I just... don't think their logic is very good in that sentence. But its kind of a tangent and unrelated to the rest of the post.

I remember reading some advice from some seasoned traders years (maybe ~decade ago). Knowing the future is overrated. Timing is everything.

Even if you knew that Tether was worth $0 as of the year 2025 with a magical crystal ball, if you don't know all the price points between now and then (and therefore are unable to make an appropriate "timing" for placing your bet), you'll lose money.

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I think a lot of us around here are willing to bet Tether is worthless. But when does everyone else realize it? That's the big question for any bubble. Timing is everything, even when you are correct.

In the meantime, Tether will be worth $1 or so, and "be operational". So even a perfectly accurate crystal ball seeing into the future doesn't help you in the now.

> In the meantime, Tether will be worth $1 or so, and "be operational". So even a perfectly accurate crystal ball seeing into the future doesn't help you in the now.

I brought it up in another post here in this thread, but I think the easiest way to know when Tether is genuinely in trouble is to keep an eye on the settlement iFinex reached with the NYAG [0] and if it's unable to fulfill it. Until then, be as sketchy as it may, it's "safe".

[0] https://ag.ny.gov/press-release/2021/attorney-general-james-...

Surely they can post 18 million?

As the saying goes "the market can remain irrational longer than you can remain solvent" !

But isn't this a special case? Unlike shorting a stock there's an upper bound on the price ($1), if it's exceeded they'll print more to depress it, so the risk of getting margin called is low. The only real risk is the financing cost.

I don't know - I would say there is a massive counterparty risk too - my understanding is that to short Tether, you need to do it on an exchange. And if this ponzi theory is right, I would be pretty woried about the return of any money from the exchanges.

If you're playing vs Bitfinex, then what if they stop printing Tether and force the price to go up?

They obliterate your short position, and once you're margin called, they go back to their printing Tethers business. You can't win at this game.

The best move is to just sit back and wait for the chaos to unfold. Even then: what if USDT becoming worthless causes people to hoard BTC? What if BTC-USD spikes severely, as people "rush to safety" ? Is there reason to believe that a Tether collapse would in fact bring down BTC with it?

> If you're playing vs Bitfinex, then what if they stop printing Tether and force the price to go up?

>They obliterate your short position, and once you're margin called, they go back to their printing Tethers business. You can't win at this game.

I'm not sure whether that makes sense or not. I guess it's worth doing for revenge reasons, but if there are people willing to pay $1.1 for a $1 IOU, that seems like the perfect opportunity to decrease your deficit.

You can trade USDT-USD on kraken and coinbase, which are some of the more regulated exchanges out there. So it's not as bad as shorting it on bitfinex itself.

Agreed, how amazing would it be to see that on all articles!

I’d like to think that even if I really disagreed with the article, I’d still appreciate the disclosure, but might just use it for fuel to ignore the content. IDK.

There is another theory that if BTC falls below X, mining is no longer profitable so the network would halt, and these points correlate with tether expansions, and the exchanges and whales are incentivized to look the other way

>There is another theory that if BTC falls below X, mining is no longer profitable so the network would halt

1. difficulty adjustments are a thing, so it wouldn't halt, only be slow until the next adjustment

2. there isn't a single profitability point for all miners, so all the miners won't drop off at once, so barring a massive collapse (eg. 95%) the network won't halt.

MSTR has raised billions in debt to buy bitcoin. If BTC falls below $10k its liabilities may exceed assets. It will be on the hook for billions of dollars and have no way to repay it but to raise more debt. Already, the last 4 or so btc MSTR purchases are underwater on more borrowed money. This is not sustainable.

Give how much BTC fell, by now he would have been better off just buying the google-amazon-facebook-tesla-microsoft portfolio instead. He was up up a lot but not anymore. And at the rate things are going insolvency cannot be ruled out anymore.

Who offers those puts? I would imagine that no credible financial institution would do that and hence there would be significant counter-party risk with those puts.

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