Once people start attacking it by eg buying them for $0.97 and exchanging for $1 thrn it might be over for tether.
Who's to say tether did not just print that money BTW? We simply don't know.
Or, alternatively, Tether is printing money every time someone posts a sell order for USDT at less than $1.
At 0.97 that would be an immediate 3% profit for each USDT they buy.
This page is irrelevant. They are not obligated to redeem your tokens. They're not liabilities. They may pretend they are, but they're not, and if the money stops flowing, they can leave with all the remaining money in the bank laughing at their idiot customers.
I think we agree on all the rest; I also believe that it’s a scam.
It reflects their desire to have is seem that way. Given Tether's well established history of lieing to try to seem more stable, this provides zero evidence for their real attitude.
That's the real question that all the bros and shills try to hide. It isn't about when Tether's price can't be kept stable, but about when Tether decides they can't make more money off the market so takes their marbles and goes home.
It is possible that Tether wouod decide to keep holding the peg, all the way until they run out of reserve assets, but it seems highly likely that there is a tipping point well before that where Tether decides to keep their remaining assets and let the peg die.
The big question seems to be whether they do have these.
Am I missing something? That's literally how stablecoins are supposed to work. Arbitrage creates demand which maintains price.
For arb, I think the trade here is: can I buy USDT and redeem fast enough that I make a low-risk spread, or am I further exposing my funds to risk over that redemption period? Versus selling USDT for USDC, for example, which I can do immediately if I trust USDC. I imagine the latter is what's happening on-chain.
EDIT: Clarified my lazy language around low-risk arb versus peg speculation.
That's not an arb, that's just buying low and selling high at a later date. The arb is buying something for $0.97 but then getting $1 back, minus fees. The more people doing that the closer the peg stays to $1 through supply/demand. That's the whole basis of how a peg is maintained, arbitrage players provide huge amounts of liquidity and make small margins for doing so.
If tether fails to redeem USDT arbitrage will stop and nothing will prevent USDT from falling more.
I have no love for Tether and love to see it crash and burn. But until it gets close to $0.9 again, I'm sitting back and not enjoying the show, yet.
USDT is shady. USDT is not depegging. USDT FUD is a classic bear market move. Whales make a killing swapping USD for USDT and pocketing 5% for zero risk.
It feels like we'll just keep repeating the same story of tether depegging, without anyone actually looking at the redeem process and what would it truly mean for USDT to depeg.
What you're seeing is USDT-USD slip on an exchange that provides that trading pair. As it is with any other traded asset, if all of a sudden you get this huge demand for USD trading, to the point that the liquidity dries up, of course this will push the price up. Take that graph and zoom out, perhaps looking at 5 year scale. This slip actually happens once or twice a year, depending on the FUD that's on the market. Market is in extreme fear with cataclysmic level events occurring (Celsius and Terra events are close to what happened to banking in 2008 or worse) weekly. Obviously every news will cause increased sell pressure on USDT and eventually arbitration between entities will not occur fast enough.
Now let's look at what happened during the last "depegging". Price dropped to .90 cents per dollar and after a while it returned to 1 USD. Look at the circulating supply of tether - in the aftermath of Terra people actually cut 20% of all supply of USDT and converted it into alternative stable coins BUSD (by Paxos/Binance) and USDC (by Coinbase/Circle) being the primary benificiaries of the flows.
Now let's look at the "depegging" claims. Tether would need to not honor the promise of USD payout when you send them USDT. BitFinex is the exchange thats behind tether and you can redeem tether for USD. During the height of the last "depegging", you could always send your USDT there and get USD back at ~1:1 ratio (https://trading.bitfinex.com/t/UST:USD?type=exchange).
While we can talk about the USDT reserves and we can talk about shady/enron level practices and the court trials, we can also say that after 5 years of they have yet to break USDT. They've cut 20% of their circulation without breaking a sweat. USDT will not crash until there is a bigger functioning alternative. All the key players will ensure that; it's game over for crypto otherwise.
Edit: Apparently there's some news: https://news.ycombinator.com/item?id=31723878
we don't care when banks only have 50% of their client's money but we do when it's tether for some reason.
1) Banks don't run their own currencies.
2) Banks don't claim to have a dollar on hand for every dollar in account balances at all times.
3) Banks are FDIC insured. Even if the bank collapses, you will get your money back.
Crypto bros, it's time to stop defending Tether. It will collapse and you will look just as foolish as the people who backed Luna and Safemoon and all the other scams.
Some do, namely the Scottish and Northern Irish note issuing banks. These have to be fully backed though.
https://www.bankofengland.co.uk/banknotes/scottish-and-north...
[1] you may want to search for terms like "regulatory capital" or "capital adequacy"
That's inaccurate. The entire idea of a bank is to connect supply of and demand for money across heterogenous creditors and debtors, which includes retail depositors and commercial lenders. There isn't a "secure savings account department" and a "risky commercial loans department"; it's all on the same balance sheet.
What does protect retail depositors (to a certain limit) are schemes like FDIC. Any retail deposits not covered by that, and any commercial deposits, will receive a haircut when the bank goes under. In the EU and UK, this has happened at least twice in the last few years.
Edit: Re-reading your comment I understand the confusion. I’m assuming Tether, if it were a bank, would function and be regulated like the Trust Department of a bank.
A bank has liabilities (customer deposits, financial contacts with other banks etc) and assets (loans, cash in a vault, their central bank balance, real estate of their office locations, office furniture etc). These are absolutely all on the same balance sheet, and the difference between the two is the bank's equity. Take a look at the Fed's balance sheet, for example: It explicitly lists the land that its branches are located on, and owned by it, as an asset [1].
What's regulated is, among other things, the required equity in relation to total assets/liabilities (capital adequacy requirements) and a high enough ratio of liquid reserves to total liabilities to handle various stress scenarios (liquidity requirements).
Importantly, and this cannot be stressed enough in this context, Tether is not a regulated bank.
[1] https://www.federalreserve.gov/monetarypolicy/bst_fedsbalanc...
The Fed is not a good example of how banks typically operate or how banking regulations are typically implemented because the Fed is not a typical bank.
12 USC 92a: https://www.law.cornell.edu/uscode/text/12/92a
12 CFR §9.13: https://www.law.cornell.edu/cfr/text/12/9.13
Securities are a different story – in that case, a bank or brokerage really only acts as a custodian for the accountholder, not adding them to their balance sheet.