There has been nothing but Tether doom and gloom since 2017 and yet here it is still at 1.0000 If anyone thinks this will drop, now is the opportunity to short, I suppose.
Do you think there is a great chance that Tether is a massive scam and will find its doom within the next 25 years?
My answer to that is yes.
Why do you think there will be a functioning market to pay you out if and when it collapses?
That's one theory. Another is that the only way out of Tether will be BTC and the pressure will likely push BTC up, at least for a while.
If the peg breaks, it breaks.
Also, if you have margin, the broker will lend you collateral and in that case you wouldn't have put up anything from your side (apart from interest payments).
In what? By whom? If they go bust, you’re just another claim on a bankrupt estate.
The person who lent me the tether can be left holding the bag - I can't. That's because I, the short seller, am not owed anything but the counterparty.
It's like taking out a loan - if the bank goes bankrupt, you don't lose anything since you _still_ have the cash.
https://www.newsbtc.com/news/reason-behind-billions-ftx-teth...
That's what people shorting the Russian ruble said in 2014. Then funding spiked to 17% a year and a lot of speculators got burned.
However, I'm not sure how likely Kraken is to take the money and run in the event that tether collapses and I have a short position. It also looks like you can do [mumble mumble borrow tether on Aave collateralized by other crypto somehow] which currently costs about a 12% / year, but if I'm understanding correctly that cost is not fixed and would likely go up significantly if tether looked likely to crash.
Can someone who knows more about the topic confirm whether the cost is actually between 12 and 20% per year and the counterparty risk is minimal, and whether or not there are non-obvious footguns with either of the above approaches to shorting tether?