The Tether exchange rate to the USD does move around a lot though, especially when crypto crashes like it did last week and I suspect that allows them some wiggle room.
For example, EUR/USDT (the Euro vs tether exchange rate) on May 19th traded from a level fairly typical of the ‘real’ EURUSD rate, 1.2180, all the way up to 1.5000 EUR/USDT as the broad crytpo market crashed. Since ‘regular’ EURUSD did not move much in this time period this allowed tether to charge anyone panicking out of tether a hefty 23% to switch out of USDT into EUR.
Then as people got back in again and bought the crytpo dip, so EUR/USDT moved down to 1.19, approx 2.5% fee going the other way.
So although I agree with what you write Mish, the market has on several occasions already panicked out of tether and has been seemingly happy to take a haircut to do so.
Maximus_Minimus
2 years ago
All cryptos are Ponzi schemes thanking their existence to print forever, institutionalized by the central banking cabal.
Raise rates above real-life inflation and they will collapse…well, just like the rest of the economy.
Lipscomb407
2 years ago
So who are Tether’s counter-parties? Commerical paper by definition has (at least) two parties. I’d think anyone that is sitting on this debt would be seriously considering calling it in. Or at a minimum not issuing any new debt. Once the counter-parties decide not to play this comes crashing down.
Isn’t the commercial paper money owed TO tether from these other parties? If the speculation is true that it’s crypto exchanges then they are in on it and won’t be the ones deciding not to play.
Eddie_T
2 years ago
There are OTHER Stablecoins that ARE transparent and well-collateralized….but they aren’t available on all exchanges, and they don’t have anywhere near the liquidity of Tether….Tether was the first stablecoin and it’s the most popular and widely used.
There are times on some exchanges when you HAVE to settle in Tether.
I never stayed in Tether any longer than I had to when I was trading , but some exchanges won’t let you cash out your account in one day…they put daily WD limits and it can take days to close a position with some foreign exchanges.
Whether Tether is legit or not, it’s obvious that big players manipulate BTC higher by using their Tether to make huge buys and “paint the tape” as they used to say in the old days in the US stock market. Bitcoin whales, mostly bitcoin miners, mostly Chinese, drive the price of bitcoin. There is nothing organic about it. It almost certainly involves multiple players colluding to commit market manipulations that would never pass muster with the SEC.
I also believe that they take their ill gotten gains and use dollars to buy gold when the price is favorable, slowly taking their own money out of bitcoin at the same time they’re promoting it as a store of value. No, I don’t have proof, but just wait and see.
caradoc-again
2 years ago
If I remember correctly HSBC won’t allow handling of BC to avoid money laundering accusations.
All in needs is all other banks to do the same?
FromBrussels
2 years ago
F …Mish , Now I even can t use F words to vent my F frustration ? Why ? Don t tell me you now belong to the bunch of F hypocrites ruling the media …..
On a bad day, usually when some crackpot official tries to insult my intelligence, I want to use X,Y, or Z on the alphabet scale, F just doesn’t cover it for me.
Scooot
2 years ago
Great article.
Isn’t Tether therefore insolvent and shouldn’t be trading?
I have always felt unease by crypto. Everyone around me says it’s here to stay. Perhaps.But crypto is almost identical to the 1800’s western banks that issued their own currencies and then failed bankrupting the early settlers. If anyone can start their own currency then what is the value of currency?
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I have always felt unease by crypto. Everyone around me says it’s here to stay. Perhaps.But crypto is almost identical to the 1800’s western banks that issued their own currencies and then failed bankrupting the early settlers. If anyone can start their own currency then what is the value of currency?