A $4B Hedge Fund Is Shorting Tether's Stablecoin | Hacker News Reader

A $4B Hedge Fund Is Shorting Tether's Stablecoin

decrypt.co

> Despite previously claiming that Tether was backed 100% by cash, the company’s breakdown of reserves at the time showed that less than 3% of Tether reserves were actually held in cash.

If this does not eventually implode cryptocurrency valuations, I don't know what will.

What's scarier, the idea that after all these years the markets haven't priced this into cryptocurrency valuations ... or that cryptocurrency valuations might already have priced this in?

It’s hard for me to imagine how it isn’t the first one.

Nothing is really priced in the Bitcoin’s valuation except risk on / risk off. It’s a pure play on appetite for risk assets and that’s about it.

People say it’s an inflation hedge but it drops on big inflation prints. It has super tight correlation with hyper growth tech stocks. It makes big moves sometimes when Elon tweets, but otherwise it’s mostly just following appetite for risk.

> Nothing is really priced in the Bitcoin’s valuation

If you are not buying or selling Bitcoin, or talking to people who are, at best! this is conjecture.

If it was going to (many expected it would), it would come at the hands of regulators.

They're not interested, and possibly even complicit, if you look at who began/still operates the thing.

Also, the stats show that the market has seemingly begun its slow shift away from Tether to less openly gross stablecoins.

If we can get exchanges to stop giving it away like the Monopoly money that it is, that'll be the final nail.

A (Formerly $13B)[1] Hedge Fund is shorting tether.

I do think that tether is bullshit wrapped in mass psychosis, but will the commercial paper-based bet actually pay off within the year, or will the markets remain irrational?

1: https://www.bloombergquint.com/markets/at-fir-tree-a-star-ca...

It's betting the US Gov won't back those notes. umm what's stopped them before.

Suspicions that Tether is a scam have existed for years at this point. There are countless articles and analysis pieces. Given all of that, why has this not affected cryptocurrency valuations? There has to be a missing piece of the puzzle, since simply suspecting that Tether is fraudulent provides no edge.

The reasoning in your comment is a perfect example of why the Tether scam has not yet affected cryptocurrency valuations.

There aren't enough smart/knowledgeable players in the crypto space (by trade volume).

I think this fund is making the mistake of confusing crypto with a classical market. In the fiat space, smart money discovers issues and starts to move it's massive dominating weight. In crypto its mostly monkeys at keyboards.

I feel that even if tether was 100% proven a scam consisting entirely of funny money, the monkeys would just shrug and be all "Well, it still does what I want it to". Whereas smart players would see the risk and avoid it.

Markets are only as rational as their actors.

> Given all of that, why has this not affected cryptocurrency valuations?

Many believe it's one of the factors that is.

Yeah I think it’s well known but you need some sort of event to prove the emperor has no clothes. You essentially have to force it to go kaput.

Interesting move. Since it is a stable coin, the risk that the underlying moves against you is low. I am not aware of a stable coin that increased its price significantly vs the linked currency. But I do know a bunch of stable coins that fell to zero. I wonder how they setup their assymetric trade.

Smells like their cryptoasset advisory team is new to the scene. It is well known and documented that tether is on shaky footing but that doesn't matter in this space so long as it is that widely used.

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