$19B Wiped Out in Crypto's Biggest Liquidation
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I don't really see the move Friday as a huge deal (in the scope of the Wild West crypto is), looks like business as usual.
Reminder, if you're invested in crypto long term, you'd better say a prayer every night that Tether is actually backed by ~$180B of liquidity.
Furthermore does it even really matter if Tether is backed by anything? My understanding is they've always maintained an absolute veto on any redemption. So tehter could be backed by Trillions in assets and it'd be irrelevant.
This is the most profitable business in the world by many metrics.
Just assuming treasury returns they're making more than 7B USD profit a year with just a couple of employees.
You're also assuming that they make 7bn in profit per year just by keeping this rdiciulously large amount of money in a bank, but their own notation says that only 105bn is held as US treasury bills. The rest of the money is effectively invested, whether in gold or bitcoin or corporate bonds or loans. All subject to going down aswell as up.
Luckily for the cryptocurrency sector, Tether makes it so ridiculously hard to turn Tether into money that their bullshit probably won't be discovered for a long time, so the make believe valuations of bitcoin can stay as they are
The passing of GENIUS act marks one of, possibly the largest banking regulatory changes in the US. The stablecoin industry is very legitimate, has very firmly established guardrails and rules, and tether is working fast to become fully compliant.
This "TeTheR iS a SySTEmiC RiSK tO eVEryThiNG" mentality is fully dead. Tether is compliant in a regulated industry, tether is backed, and tether is quickly running away with the entire market.
I don't know why I'm bothering to reply. Tether truthers are modern day financial luddites, willingly blind and ignorant of the sea change taking place in plain sight after the passing of GENIUS.
Well they must be regulated somewhere, right? Where are the reports from regulators that all is OK, or at the very least an audit.
And if you can't get one of the Big 4 to sign off on your finances, then you have big big problems. Even Wirecard and Enron managed that.
But hey, ultimately it's just gonna blow up the economy at some point, but we'll be fine right? Right?
As a long-term holder of Bitcoin I do not see why I should lose any sleep due to Tether risks. Why should I care even if it de-pegs?
On the liquidation itself: leveraged bets gone wrong will get liquidated, whether the bets were on stocks, currencies, Treasuries, crypto or grain futures. BoJ, for example, regularly makes rapid large buys to shake out leveraged yen speculators. I do not see anything concerning or unusual with this week's crypto shakeout. My 2c.
As a long-term BTC holder my primary reason is protection against debasement. It is a volatile asset, historically with 50-80% drawdowns from time to time. But as long as I think it still serves as a hedge against debasement I am happy to hold a portion of my net worth it in.
Growing up, I have seen fiat go worthless twice in my life: once the government zeroed out previous money overnight, once it hyperinflated fiat by over 1000x in two years. An 80% temporary drop is peanuts compared to that.
Being completely ignorant on all of these, where can I read about this?
2. Wall Street Journal — “Cantor Fitzgerald Helps Oversee Tether’s Billions in Treasurys” — on who holds and manages a large chunk of Tether’s reserves. https://www.wsj.com/finance/currencies/wall-street-firm-over...
3. CoinDesk — “Tether’s banking relationships & commercial paper exposure in newly released NYAG docs” — FOIL-sourced documents on what sat inside reserves. https://www.coindesk.com/policy/2023/06/16/tethers-banking-r...
4. CFTC (primary source) — 2021 order fining Tether over reserve claims — official enforcement record on “fully backed” statements. https://www.cftc.gov/PressRoom/PressReleases/8450-21
Tether's backing / solvency become more important when it's a major provider of crypto liquidity.
If liquidity is generated by many participants, the failure of one doesn't impact the underlying asset.
If liquidity is concentrated in one participant, it increases the potential volatility of the asset, as that participant's failure can drastically limit liquidity and leave the asset open to bigger price swings.
That said, even at $1B, Tether is a smaller portion of the BTC market than it was historically.
I think disproportional media interest in last two weeks of appreciation and "the crash" is a failed attempt to finally kickstart this BTC bull or bear market. Somebody is getting impatient with last two years of steady growth.
The real story here is insider trading and corruption by people close to President Trump, who knew, down to the exact minute, when to short BTC and ETH.
BTC, meanwhile, being a scarce asset, will recover as fiat supply increases with time.
It's obvious, it's out in the open, and nobody will prosecute it.
The pump of ZCash also prove some like to clean their history (nowadays that Monero was attacked to crash Houthis international trades).
It's business as usual for those who know the business, many are newcomers.
- Hackers likely exploited a Binance collateral loophole in its Unified Account system to trigger mass liquidations on October 11.
- Collateral assets USDE, wBETH, and BnSOL crashed sharply, wiping out traders and market makers as liquidation prices relied on Binance’s spot order book.
- The attack happened between Binance’s oracle update announcement and its implementation, suggesting precise timing and planning.
> In addition to the rationing system, the government provided food through soup kitchens in the cities. As the intensity of the famine increased, the reliance on soup kitchens increased. In April 1945, 1.8 million people in the cities were served daily. One pint of soup per person was the normal ration. The quality of the soup deteriorated over time and some people considered it inedible. The caloric content of a soup ration diminished from 483 calories to 268 calories. The soup served was often made from sugar beets, tulip bulbs, and potato peels. Pet dogs and cats were sometimes eaten.
Wow...
If you are unable to do that, then you implicitly agree, as pretty much everyone does now, that bitcoin has an intrinsic market value that will remain over an indefinite time horizon
So you can take advantage of the market? No way, only insiders are allowed to do that.
I could change your question: Do you think possible that the value of bitcoin will go to zero?
If yes, you implicitly agree that it's fueled by speculation and a Ponzi scheme that needs a constant influx of fresh, if boring, fiat currency.
A captain, back from a long voyage, therefore oblivious to the bulb bubble, received his payment served on a plate, then proceeded to eat it.
a13z's continued insistence that bits of data are in fact a "digital asset class" just slays me.
To parallel with videogames, the dominant game of capitalism has been captured by a small group of griefers using glitches and exploits to win.
If you see BTC rising faster when you look at its price in dollars you don't see the appreciation of BTC. You see the decline of the dollar.
And it's not like the euro hasn't been inflating..
Is there anything people can actually use to see what's going on ? Gold? eggs?
When folks get scared, pure speculation instruments like BTC will tank.
How is BTC not the exact opposite of gold? It has no fundamentals whatsoever, no uses outside its transactability, and is widely used to speculate.
If BTC is the exact opposite of gold, it follows that Eth, Ripple, USDC, etc are all more gold-like than BTC. I'd be interested to hear why you believe that to be true.
BTC is a coin with longer investments and does not fluctuate as much as other cryptocoins (by %). It has a known supply (past, present and future) and predictable mining rate. It has a known finite future supply cap.
To be clear i don't believe BTC is a perfect gold analog. But if you have to pick the "most gold-like" digital asset, it would make my short list.
As far as I understand, Bitcoin is backed by energy and scarcity, much like gold: it requires significant energy to "mine" a Bitcoin, and it can't be easily duplicated, if at all. That's its intrinsic value, unlike fiat currencies that can be printed easily (correct me if I'm wrong).
I also believe that even gold has little intrinsic value, perhaps even less than steel. Ultimately, it's really a question of how valuable something is as a medium of exchange. Bitcoin is durable, portable, divisible, scarce, verifiable, and decentralized, which makes it a valuable form of currency. I suppose that's its exchange value.
If that is good or bad is an open question.
So yes, whether Bitcoin is money or a security remains an open question.
Uh that energy is spent though, transformed into heat , you can't reverse all that hashing and have the computer emit electricity.
I think for it to be a currency it has to be accepted for real world products? A currency is also useless if it fluctuates this much because you cannot set prices for anything.
By your logic stocks would be a currency?
A security is what it is at this point
Gold's perceived value may be higher, but that's only because it's perceived, incorrectly, to have "intrinsic" value.
There is nothing to worry about if you are happy to hold the assets long term. It's an opportunity if you have spare cash. It's only a problem for those leveraged players and people who need to sell right now for whatever reason.
1) there is a lot of circumstantial evidence of insider trading before the timing of presidential tariff announcement. further the accounts that traded on hyperliquid DEX were funded 24hours before even the first tweet by the president indicating fore-knowledge.
2) crypto exchanges have a feature called auto-deleveraging which closes long and short positions to 'preserve the solvency & integrity of exchange'. apparently this got kicked in when some of the thinly traded coins just didnt have a market maker & basically floor fell out of price.
3) looks like some screwup happened (likely intentional unknown atm) with the price reporting oracle between decentrralized exchanges like hyperliquid and Centralized exchange used (binance). people are claiming intentional sabotage by binance because they have a competing dex called aster. who knows.
4) leverage play, everybody was levered up because of up-tober expectations. so even small movements wiped out peoples saving.
The US government could mostly destroy the crypto market tomorrow with a policy change. That's all it would take. If the US government came out and said to access SWIFT and the US financial system, any financial institution is not allowed to trade fiat currencies to or from crypto currencies then that's it, it's over.
The real problem with crypto is the biggest proponents of it simply do not understand the financial system. In fact they're almost the opposite: they're proud of their ignorance. They wear it like a badge of honor, like it lets them be a better disruptor. Sometimes, that's true. But for those of us with some understanding of the financial system, we just shake our head as the crypto market relearns the lessons already baked into the financial system.
Here's another myth: currencies were never backed by gold (or silver). The US Dollar has never been 100% backed by any metal. What really backs the US dollar is the US military. Yes, we previously had a soverign promise to exchange dollars for gold but that's just a promise. We saw under FDR how that promise can simply be changed when there was a sovereign currency devaluation.
>The US Dollar has never been 100% backed by any metal.
This is not accurate but the devil is always in the details. What exactly does "backed by" mean? If we mean pre Bretton Woods (1971), then, for all intents and purposes it WAS backed by Gold, not just a promise. The federal reserve could not conjure up fiat dollars on theirs (or anybody else's) whims and fancies.
Pre-1971 US dollars could be freely traded/swapped for gold at any bank at the then rate of 1oz of Gold = $35. This was written in stone.
Of course, then Nixon did what he did in 1971, and as they say the rest is history.
p.s. The Bretton Woods Agreement/system/whatever you wanna call it, came into being in the aftermath of WWII, in 1944. This was [1] essentially an agreement that those 44 countries will use the US dollar (and by correlation, the USD<->gold peg) as long as the (US) powers that be didn't fuck it up.
p.s.2 - A lot of people don't realize that these accords were what established the IMF, and the beginning the World Bank, BIS etc.
So, what happened in 1971 and what did Nixon do?
"On August 15, 1971, President Richard M. Nixon announced his New Economic Policy, a program “to create a new prosperity without war.” Known colloquially as the “Nixon shock,” the initiative marked the beginning of the end for the Bretton Woods system of fixed exchange rates established at the end of World War II." - per US Office of the Historian.
So, yes, things can change due to government actions, and yes Bitcoin and its peers could be rendered worthless in a heartbeat, if the power that be want it.
>What really backs the US dollar is the US military Agreed. But as always there's a time factor. This was true around that time, but not so much today in 2025. While the European military assets are not worth talking about, China and Russia both have continued developing those assets and do present an equalizer today. Are they equal to/better/worse than the US military is somewhat of a moot point. They exist. That in itself is the point.
[1] - The Bretton Woods system of monetary management established the rules for commercial relations among 44 countries, including the United States, Canada, Western European countries, and Australia,[1] after the 1944 Bretton Woods Agreement until the Jamaica Accords in 1976. - As per Wikipedia.
In the 1800s 1oz of gold was tradable for $20. The $35 figure was already accounting for some inflation despite the backing (I don't recall the year it changed, but sometime in the 1930s seems reasonable)
$1 used to be tradable for 1oz of silver. since silver and gold have different supplies though sometimes you could (in the 1800s) make a lot of money from this.
January 31, 1934. But first the US Treasury took over the US gold supply from the Federal Reserve.
But financial literacy comes really from media literacy, asking basic questions of who is telling you something, what is their track record, who are they paid by, what are they selling and what other people say about what they say. Too many people simply react to emotions and look for confirmation bias. Also, one needs to distinguish between analysis and justification.
There's opportunities for this every day. It can be as simple as asking what a bank does or how mortgages work. You'll quickly get to a point of asking what fractional reserves are, what the FDIC does and how the government keeps banks solvent.
You then look at what a currency is and how currencies have evolved over time. The early history of currencies can largely be derived from first principles.
Example: in primitive societies, people migrated and followed food. As time went on they'd start to specialize and have excess goods and you'd end up with barter systems, even more so once you had agriculture and you started to see permanent settlements. But bartering is inefficient. You might have the leather that I want but you don't want the cheese that I have. Maybe you'll take it because you can trade it, maybe not.
So people started trading in things that they assigned value to eg silver and, later, gold. It's important to note that this value is "assigned" because, beyond jewelry, gold didn't have a lot of early utility. It has useful properties, like it's inert, fungible, divisible and hard-to-counterfeit (because of it's density).
But dealing in gold itself is awkward so political entities started creating currencies. There were IOUs and contracts but currencies eventually became a promise to exchange it for gold, if requested, by some political entity.
And this really takes us into the 20th century where countries issued currencies and they backed those with gold reserves, literally thousands of tons of gold.
It quickly gets a lot more complex from there as 50+ years ago we ended up with fiat currencies, meaning the value is set by markets instead of an agreed upon exchange rate.
You have people who think abandoning the gold standard was a mistake, often called "goldbugs". Many goldbugs moved to crypto. You can see why: the idea is that the supply of Bitcoin (or whatever) is predetermined. You can't just "print money" (they say). The truth of printing money is more complex. A big problem is the US consistently runs a trade deficit.
I'm not sure how helpful that all is. Just some random thoughts.
But, at an emotional level, Bitcoin is considered a high-risk asset. So, whenever fear gets heavy in the fear/greed equation, Bitcoin is one of the first places people pull money out of as they flee to safety. It's also the "High Risk-High Return" spot for folks to plunk their "spare change" when they are feeling safe. So, in practice short term moves in Bitcoin are highly correlated to short term moves in equities.
Meanwhile, if you actually run the numbers, Bitcoin has out performed the SP500 (or even the SP10) by a large multiple over the past decade while having a volatility usually around the median of the SP500-top-10 that everyone is currently betting heavily into. People just have a hard time getting out of linear thinking and so they look at the big dips as short-term linear disasters while on a long-term, logarithmic view they have been rather boring. https://www.reddit.com/media?url=https%3A%2F%2Fi.redd.it%2Fd...
I don't see how you get to that logic. BTC is a speculative growth asset held by the same people who speculate on securities, and for the same reason. In fact by virtue of being "pure" speculation, it should be expected to be even "stockier" than stocks! You don't buy bitcoin to influence corporate governance or derive dividend income. The only reason anyone purchases crypto is to sell it later at a higher price.
So if you need to dump an asset to backstop other debts, it's going to be your crypto wallet you reach for first. It'll crash harder, almost by definition.
1. You need it for use as a collateral asset for smart contracts. There are no crypto cops or crypto courts. Only collateral gives contracts teeth. There are many options here. Just like there are many options for collateral assets in traditional finance. But, BTC is the top dog for the role and the first choice of individuals and institutions trying to lay down the foundations of decentralized finance.
2. You are speculating that the growth of BTC's growth in value as a collateral asset will outpace the growth of other assets. This as played out well over the past decade.
But #1 simply isn't correct. Yes yes yes, I've read all the kool aid papers too. But the amount of crypto held as a "collateral asset for smart contracts" is effectively zero. BTC, in practice, just gets parked. Most wallets never trade at all.
I recently reviewed my investments and wrote about it on my blog, curiously around the time when US announced its tariffs around April, pretty much everything dropped, including crypto like BTC and ETH.
DOJ seizes $15 billion in bitcoin from 'pig butchering' scam based in Cambodia
https://www.cnbc.com/2025/10/14/bitcoin-doj-chen-zhi-pig-but...
They made nearly US $200M profit. Someone in the Trump admin is cashing in, and it's not the first time this has happened.
> Amid the market's downturn on Friday, our view was that the 100% tariff announcement by Trump was a bargaining chip.
> After China's statement last night, we believe the odds of Trump's 100% tariff on China going into effect are extremely low.
"Does nothing, wins" is getting a bit out of hand: they're going back in time and winning 26 hours before they even start.
What's more interesting is how massive hte insider trader problem is already and it's only going to get worse. At some point it's going to undermine the financial markets themselves because nobody is going to trust it. Libertarians might get mad but financial markets, like all markets, require strong regulation to function.
A consequence of the presidential immunity decision is that Trump and his orbiters are allowed to insider trade with absolutely no repercussions. If somebody in his orbit does get in trouble, no problem. Just sell another pardon.
The US control and influence over the global financial system is a key pillar of its global power. As much as we might hear platitudes like "America First", this administration has done more to destroy the global power and influence of the US than any in living memory and it's not even close.
In dollar terms sure, but it's a meaningless blip percentage wise. The NASDAQ shed more than its entire market cap in the 2000s this year in a few days and it went right back up. We are in a fantasy world where numbers don't mean anything anymore.