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Comment by hmate9 | Hacker News Reader

Shorting Tether is a great play. Either everyone loses faith and nobody trusts them anymore or.... it stays at $1. You are not going to lose. You just have to pay funding fees for your short which on FTX is around 4% a year.

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.

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> Shorting Tether is a great play

Why do you think there will be a functioning market to pay you out if and when it collapses?

Or that the person from whom you borrowed Tether to put on your short position won't demand it back while it is collapsing.

That’s the whole point of shorting? If it collapses you will buy it for pennies and give it back

I think the better trade would be to do a hedged short against bitcoin, perhaps using futures; if Tether collapses, Bitcoin is going to get hurt as well.

> if Tether collapses, Bitcoin is going to get hurt as well.

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.

On BTC/USDT markets. It will collapse the USD/BTC markets that futures contracts use.

This assumes that USDT/USD somehow holds at the same time USDT collapses? What will actually happen is that USDT will flood into BTC, driving BTC up in terms of USDT and down in terms of USD.

If the peg breaks, it breaks.

You get paid immediately when opening a short position

Sure, you get "paid", but in reality you're still out money because you had to put down more than you got paid as collateral. That collateral can disappear.

You pay collateral to your broker, not the counterparty.

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).

> You get paid immediately when opening a short

In what? By whom? If they go bust, you’re just another claim on a bankrupt estate.

If I short tether, I am borrowing tether and selling it immediately. I get the proceeds from the sale immediately.

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.

You can short the proxies: Coinbase etc

Given how deep FTX is into USDT, it's rather unlikely they'd survive a Tether implosion, and your short position will there will evaporate in a puff of smoke.

What do you mean FTX is deep in USDT?

> What do you mean FTX is deep in USDT?

https://www.newsbtc.com/news/reason-behind-billions-ftx-teth...

https://www.youtube.com/watch?v=BQiRA_-VAd8

They (through Alameda) issued about a third of all USDT, ever

Woah. Wasn't aware of this. This is pretty worrying.

> Shorting Tether is a great play. ... You just have to pay funding fees for your short which on FTX is around 4% a year.

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.

you could probably fund this by selling some far out of money bitcoin puts.

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