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Comment by JumpCrisscross | Hacker News Reader

> 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?

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.

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

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

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