Tether's USDT Stablecoin Slips from $1 Peg

https://www.coindesk.com/markets/2022/11/10/tethers-usdt-stablecoin-slips-from-1-peg/

by top_sigrid • 4 years ago

90 50 4 years ago

coindesk.com

oneoff7863• 4 years ago

Looking like it might drop below 98 cents soon. Interesting

Lionga• 4 years ago

97 cents on Kraken now

sdiacom• 4 years ago

And yet it's a bit over one dollar on Bitfinex. It's gotta be bad, they're not even bothering to make it subtle this time.

oneoff7863• 4 years ago

I don’t really follow in detail. What am I getting when I Google search “usdt price”?

(97.5 currently).

fabian2k• 4 years ago

I really don't know enough about this topic to judge the impact, but from the data I can see this looks like it depegged lower than in the previous incident that was widely reported. That one was to 0.995 and this one is to 0.990 (at the moment I looked it up).

rocqua• 4 years ago

I believe the all time low of tether is 0.92$. So it has recovered from worse.

sekai• 4 years ago

Yeah, it's a non-story, it's almost never exactly 1:1 in secondary markets.

lupire• 4 years ago

The primary market for tether has huge transaction fees, so any collapse will happen on secondary first.

bunderbunder3• 4 years ago

I am not a markets expert, but I would guess that straying far from $1.000 on the secondary markets for any length of time at all is a sign that something very bad is simmering under the surface. There should, I would think, be enough liquidity in a fungible, theoretically stable asset like this that such a glaring arbitrage opportunity can only exist on quantum time scales.

bhouston• 4 years ago

I am waiting for a panic spreading tweet from CZ. He has his own stable coin so it would make sense to spread panic here. But this may be giving the game away a little too obviously, so maybe now isn’t the time.

I do expect unless something else drops that Tether will survive this.

oneoff7863• 4 years ago

He has his own stable coin so it would make a bit of sense to spread panic here.

Yeah that couldn’t possibly backfire

kuratkull• 4 years ago

Strange that the price has dropped a lot less on Binance, to 99.8, while it's 97.x on Coinbase

pjc50• 4 years ago

Presumably Tether run market-maker operations to stabilize it, but that requires keeping actually valuable cash at exchanges, which has its own risks. They can run out of firepower, and it's not as simple as it sounds to arbitrage between exchanges.

permo-w• 4 years ago

it doesn’t sound simple. if i’m understanding correctly it sounds like it could very quickly lead to competing demands of more and more money from competing exchanges

SilasX• 4 years ago

It’s seeing significant borrowing on the DeFi platforms too, perhaps in anticipation of a price collapse (which would make it easier to pay back):

Aave, 60% to borrow: https://app.aave.com/reserve-overview/?underlyingAsset=0xdac...

Compound, ~40% to borrow: https://compound.finance/markets/USDT

deweller• 4 years ago

I assume that holders of USDT are, perhaps, concerned that Bitfinex and Tether are similar to the FTT token. They may wonder if Bitfinex has Tether on its balance sheet and that the Tether is not actually backed by reserves as claimed.

In May, Tether weathered a significant liquidity crunch and recovered its peg by July.

jpm_sd• 4 years ago

"A representative for Tether told CoinDesk in an email that issuer Tether Global is unexposed to both Alameda and FTX."

Well, except in the broader sense of crypto contagion. Tether is certainly exposed to BTC and ETH, both of which are plummeting this week.

olalonde4• 4 years ago

Tether is certainly exposed to BTC and ETH, both of which are plummeting this week.

Why certainly? It would be quite remarkably dumb. In theory, a fiat-backed stablecoin is only supposed to be exposed to the fiat it is backed by.

fjckvuvub5• 4 years ago

Yes. It would. And yet they do.

gilrain• 4 years ago

Because cryptbros are incapable of taking the wise choice when the greedy choice is on the table. So predictable.

bunderbunder3• 4 years ago

We had that recent-ish case in the New York courts that uncovered that USDT is mostly not backed by fiat currency, and that they had been lying about this since at least 2017.

olalonde4• 4 years ago

6 months ago as well: https://news.ycombinator.com/item?id=31349988

dfc• 4 years ago

USDT is trading at 97 cents on several bourses, and briefly fell as low as 93 cents on the Kraken exchange.

Is bourses crypto jargon I'm not aware of?

logifail• 4 years ago

Is bourses crypto jargon

Much older than that, it's more general finance jargon. The relevant definition[0] is:

"A stock exchange. (figuratively) Any place, real or imagined, where the value of a thing is settled."

[0] https://en.wiktionary.org/wiki/bourse

lotsofspots• 4 years ago

It's a common term for a stock market in non-English speaking countries.

matthewaveryusa2• 4 years ago

Bourse in French means a sac/purse, scrotum, a scholarship, a market, and the stock market. Not sure what the origin is but it's not Latin.

Edit: It's from Greek inspired mediaeval Latin bursa meaning leather

akmarinov• 4 years ago

It translates to market or marketplace

matthewaveryusa2• 4 years ago

Is this the same as breaking the buck?

rippercushions3• 4 years ago

Yes, if it sticks, but Tether has had a couple of scares before and bounced back.

rippercushions3• 4 years ago

And back up to 0.99 on Coinbase as I type this: https://pro.coinbase.com/trade/USDT-USD

Meanwhile, Alameda (SBF/FTX's trading arm) is apparently shorting Tether. https://twitter.com/mhonkasalo/status/1590665714490544128

Which is particularly interesting since they're known to be one of Tether's largest customers. The only rational explanation I can think of is that they think Tether is primed to tank, and they're trying to beat the rush to the exits like Goldman Sachs pouncing on Bear Sterns.

mjnaus• 4 years ago

Large holders of Tether would be pretty dumb to short it, as they'd be shooting themselves in the foot. If Almeda indeed knows something the rest of the market doesn't, they would (assuming rational action) quietly be exiting their position.

theCrowing• 4 years ago

depends on the payout if your short is better positioned than your holdings...you short. Like Deutsche did 2008.

forgetfulness• 4 years ago

They could do both, cut their losses by selling and selling high, buying low other people's Tether, depends on how much of their own holdings they can liquidate.

throwaway294566• 4 years ago

Shorting tether can simply be a hedge against falling tether if you are holding large amounts. Doing that with stocks is completely normal and nothing to raise an eyebrow about.

edf13• 4 years ago

I'd say it's more of an issue that they are still trading when potentially insolvent

wizeman• 4 years ago

Out of curiosity, why is shorting better in that situation rather than just selling part of what you're already holding?

I mean, why is being long $100k USDT and short $50k USDT at the same time better than just being long $50k USDT?

I don't have trading experience so this is not very intuitive to me.

Edit: oh, I think I get it. So if you were short $SOMETHING/$USDT then you're effectively long $USDT so if $USDT falls/crashes (i.e. loses its peg) even though $SOMETHING remains equally as valuable (as measured in other currencies), then you could lose a lot of money even though the underlying value of $SOMETHING hasn't really changed. So you could short $USDT/$USD to mitigate $USDT crashing when you're only interested in shorting $SOMETHING. I guess that makes sense?

irusensei2• 4 years ago

Did I count the zeroes right? How is a 250k short worthy of notice. It’s more like FTX still gambling using the last scoop of their customer’s money.

johnebgd• 4 years ago

It finally has begun.

ndsipa_pomu• 4 years ago

https://xkcd.com/1656/

irusensei2• 4 years ago

Everytime tether goes 0.99c these wishful thinking threads appear. No thread is created when the value is 1.01. Perhaps those fluctuations are the norm price on exchanges?

I’m not defending tether (I’m going to be downvoted to oblivion anyway because these types of threads are based on spite rather than logic) but it always have the “raises fist this time I got you spider man” vibe.

zinekeller• 4 years ago

Actually, it went to ~0.95 (and apparently went 0.93 on a single exchange). 0.99 is not really significant (and is usually not pointed out anyways).

Correct me if my data is incorrect, but checking on historical data it seems that (except for its early days) Tether didn't went above 1.02, so that's maybe the reason that all of reports were dips?

evdubs2• 4 years ago

Sure, it's FTX, but Tether traded up to $1.20 yesterday.

https://ftx.com/intl/trade/USDT/USD

evdubs2• 4 years ago

To add to this, USDT:USD reached $1.20 on FTX yesterday, and has spent most of today and yesterday above $1.01 with around ~$10M trading every hour. Even though FTX has halted withdrawals and is presumed dead, this type of trading activity is useful in understanding how stablecoin markets perform under extreme stress.

https://ftx.com/intl/trade/USDT/USD

Tether's USDT Stablecoin Slips from $1 Peg

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