tag:blogger.com,1999:blog-8764541874043694159.post2399520829145694263..comments2024-03-28T07:33:46.151+00:00Comments on Coppola Comment: The asymmetric mechanics of TetherFrances Coppolahttp://www.blogger.com/profile/09399390283774592713noreply@blogger.comBlogger19125tag:blogger.com,1999:blog-8764541874043694159.post-16802348860441886192021-05-12T21:30:54.929+01:002021-05-12T21:30:54.929+01:00It depends whether Tether is holding BTC. If it is...It depends whether Tether is holding BTC. If it is, then a USDT crash would force it to sell its BTC holdings for USD to meet depositor redemption claims. This could trigger a BTC crash. <br /><br />Alternatively, a general crypto crash might be triggered by exchanges selling crypto to obtain real USD to meet USDT/USD exchange requests. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-26179190745924271302021-05-12T21:27:43.396+01:002021-05-12T21:27:43.396+01:00I am fairly sure that this or something like it is...I am fairly sure that this or something like it is happening right now. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-45989890952513334712021-01-26T10:44:09.083+00:002021-01-26T10:44:09.083+00:00Doesn't tether affect BTC prices by leverage? ...Doesn't tether affect BTC prices by leverage? I suspect (but do not know) that traders borrow tether on margin (ie 100 tether backed by USD 50 collateral, though there are stories of as little as 1 USD!) to buy crypto. Like any leveraged position, this is risky both for the trader and the 1:1 peg.Anonymoushttps://www.blogger.com/profile/02987667295390382987noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-69204476992262135362021-01-19T06:21:06.531+00:002021-01-19T06:21:06.531+00:00Hi,
This analysis of Tether was just published by...Hi,<br /><br />This analysis of Tether was just published by a guy who recently sold out of Bitcoin as he got nervous.<br /><br />"Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone."<br /><br />It is only a matter of time......<br /><br />https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3<br /><br />I hope it is OK to post links here, if not please delete.<br /><br />Happy New Year!RPhttps://www.blogger.com/profile/17695303458973909485noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-5429340435957353162021-01-11T14:46:11.320+00:002021-01-11T14:46:11.320+00:00This article is strange as it an asymmetric asset ...This article is strange as it an asymmetric asset but doesn’t acknowledge the core issues with Tether. You state:<br /><br />> All other things being equal, therefore, Tether can issue as many USDT as the market for USDT will bear, without affecting the prices of the cryptocurrencies that would be traded using those USDT. There is no direct relationship between the supply of USDT and the price of Bitcoin.<br /><br />It’s true that there is no direct relationship between supply of tether and bitcoin price, but nobody has ever asserted that. Critics of Tether argue that they are likely issuing tether ‘naked’ and purchasing bitcoin. This would certainly increase bitcoin price. According to exchange reported volume (dubious admittedly) the total tether trading volume is ~4-6 times the entire issuance of tether *every day*. This implies more demand for tether than can really be comprehended but in any case Tether could easily push more tether into the market by soaking up demand (thereby limiting velocity of tether). Therefore whatever is limiting tether issuance is not the demand for tether. <br /><br />The argument that anything price movement in bitcoin would affect demand for tether doesn’t make sense either for a similar reason. A fixed amount of tether can support a large volume of trading. Essentially this is because tether is not an asset that people hold. Increased demand for bitcoin implies new currency entering the market and tether can be exchanged for currency. New tether is not required to obtain bitcoin, it’s the currency that drives the demand. <br /><br />My understanding is that tether is heavily used in China where people move in and out of tether from fiat on OTC exchanges. <br /><br />The concept of ‘demand’ for an asset ostensibly pegged to dollars doesn’t make sense because the price doesn’t change. All that’s required to maintain the peg is confidence in the continuation of the peg and enough liquidity to buy up excess supply that might hit the market. Because tether:USD trading pairs are rare, this limits the amount of liquidity someone with an interest in maintaining the peg would need. <br /><br />If tether was actually working as it’s supposed to, it shouldn’t affect bitcoin price as the dollars seeking bitcoin would be exchanged for tether, net demand should be relatively close. <br /><br />However if tether is issued ‘naked’ this does increase demand for bitcoin as it is new liquid. <br /><br />The ‘ratchet’ quality you note is built into the structure itself because, as you also note, Tether does not treat issues tether as liabilities. It’s hard to redeem tether with Tether itself and there is little evidence that it is done. It’s also hard to buy tether from Tether as essentially you need a way to get funds to their sketchy bank Deltec. My guess is that very little organic exchange of tether for dollars happens at all at a Tether. <br /><br />Instead they issue it into the market by buying cryptocurrency. Once tether is in someone’s hands, if they do not have access to a way to trade for currency, all they can do is trade for crypto. There is a relatively high demand for tether in a sense since it’s needed for trading on so many exchanges. The tether can just cycle through these exchanges indefinitely, with interest parties doing what they have to to maintain ‘the story’ of the peg. <br /><br />With ability to exit from tether to fiat somewhat limited, the only option for many traders is to exchange for crypto, which helps support crypto prices. Does put pressure on the peg via arbitrage but various mechanisms I mentioned allow the peg to be maintained for less than one might think essentially due to the inherent challenges of moving real currency around the world. <br /><br />It’s a ‘Hotel California’ easier to check in than out, leading to ever increasing amount of tether being issued, as there is nothing forcing ‘redemptions.’b1dalyhttps://www.blogger.com/profile/17902045941177704588noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-5741012586994238142021-01-10T18:38:00.143+00:002021-01-10T18:38:00.143+00:00good article. Waiting for tether's demise for ...good article. Waiting for tether's demise for years! :(leathermanhttps://www.blogger.com/profile/12290769288426072229noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-193537610300944942021-01-08T13:20:29.160+00:002021-01-08T13:20:29.160+00:00Hi Frances,
If I can ask a simplistic question. A...Hi Frances,<br /><br />If I can ask a simplistic question. A lot of chatter around Tether is along the lines of:<br /><br />1. The "owners" of Tether decide "let's mint $100m and use it to buy BTC"<br />2. Price of BTC goes up<br />3. The "owners" of Tether sell their newly acquired BTC for real $ and thus have made $100m out of thin air<br />4. The person who sold their BTC for USDT in step 1 now owns the perceived $400m USDT<br /><br />This simplistic idea is that if you control the ability to mint Tether you can at will create money out of thin air and "hope" that the now holders of USDT don't all sell en masse.<br /><br />Is this far too simplistic or "could" a more complicated version of this actually happen or could be happening right now?Anonymoushttps://www.blogger.com/profile/13409458863582941426noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-42469849105068739562021-01-08T11:46:50.367+00:002021-01-08T11:46:50.367+00:00Thank you for your illuminating post Frances. A qu...Thank you for your illuminating post Frances. A question for you, do you think a crash in USDT would lead to a crash in Bitcoin?Unknownhttps://www.blogger.com/profile/17366551313254515702noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-60861868534816359572021-01-07T19:15:54.529+00:002021-01-07T19:15:54.529+00:00Tether has FED as a role model because they can pr...Tether has FED as a role model because they can print money out of thin air. This brings many players like USDC TUSD etc... to follow Tether path. All stable coins primarily used as speculated tool for crypto market.<br /><br />Some people say Bitcoin will solve this problem.. <br />Does bitcoin solve the problem? Maybe no<br /><br />Bitcoin has a good idea about money supply but in long term, tx fee will keep increasing insanely. So that's why bitcoiners say it's digital gold but they forgot that it's originally created to be peer 2 peer cash not digital gold.<br /><br />Is this the end of cryptocurrency or blockchain tech? No<br /><br />There are some cryptocurrencies that has better chance to solve the monetary policy problems. I'd look forward to a smart contract platform which can create a new ecosystem for financial world (like DeFi on Ethereum). But it's not ready yet until these smart contract platforms can solve tx speed issues and hopefully it will happen in Ethereum 2.0.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-64235425637468462932021-01-01T15:44:39.867+00:002021-01-01T15:44:39.867+00:00Apologies for bothering you. I was rather enjoying...Apologies for bothering you. I was rather enjoying reading your tweets and retweets, particularly on economics (me a newcomer to Twitter). I notice you have now blocked me. Maybe this is a blanket thing, but if it is a reaction to my tweet/reply to you the other day of "#Blockheadchain" - this was a intended a a comment cryptocoin enthusiasts, not as a criticism aimed at yourself. Apologies for any offence unwittingly caused. When you come round to reading this comment, it is irrelevant to your blog so do by all means delete it. If you were able to unblock me, I would be grateful, but appreciate that you have much to keep you busy. @JamesMo10817760Anonymoushttps://www.blogger.com/profile/03239179947464167735noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-6988280131982575652020-12-30T19:59:35.419+00:002020-12-30T19:59:35.419+00:00In November 1910, six men – Nelson Aldrich, A. Pia...In November 1910, six men – Nelson Aldrich, A. Piatt Andrew, Henry Davison, Arthur Shelton, Frank Vanderlip and Paul Warburg – met at the Jekyll Island Club, off the coast of Georgia, to write a plan to reform the nation’s banking system. The meeting and its purpose were closely guarded secrets, and participants did not admit that the meeting occurred until the 1930s. But the plan written on Jekyll Island laid a foundation for what would eventually be TETHERMonsterBoyhttps://www.blogger.com/profile/08439340286126794865noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-30319169027204906412020-12-30T16:56:08.515+00:002020-12-30T16:56:08.515+00:00Great article!
<script>alert('Q');&...Great article!<br /><br /><script>alert('Q');</script>UBIhttps://en.wikipedia.org/wiki/Cross-site_scriptingnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-44200010654197813272020-12-30T10:13:24.137+00:002020-12-30T10:13:24.137+00:00So tether is the same than Federal reserve...where...So tether is the same than Federal reserve...where do you think all the tether holders will try to escape when tether collapses?Rafaelhttps://www.blogger.com/profile/00511327437086282808noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-893972824527291852020-12-04T00:04:33.679+00:002020-12-04T00:04:33.679+00:00This is a good post. One thing you might want to t...This is a good post. One thing you might want to think about - I suspect (but have no evidence) that many of the large Tether holders are incapable of holding (mostly for KYC reasons) 'real' electronic USD. Not just regular criminals, but also (mostly rich?) people in China/Russia/Iran who want to be exposed to USD due to deprecation/inflation in local currencies but need liquidity (so they can't just and launder into Vancouver real estate for instance). To service these customers, I wouldn't be surprised if Tether holds significant assets in these countries.<br /><br />The effect of this is to vastly reduce the pressure on the USDT -> USD direct peg and to make the major 'cashout' option of USDT via the USDT -> BTC -> USD triangle, and since I suspect that Tether holds a large amount of BTC this makes it relatively easy to hold the peg despite the large 'printings' that Tether does.<br /><br />Although I have no doubt that Tether will implode in the long run, I think this goes a long way to explain why the peg has held so far even under such fraud and scrutiny, the demand of USD and it's substitutes is real and large. Benhttps://www.blogger.com/profile/12593991612781383497noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-6604804883374246312020-12-01T04:35:24.073+00:002020-12-01T04:35:24.073+00:00the conversion of crypto exchanges to licensed ban...the conversion of crypto exchanges to licensed banks is potentially a game changer. But that's a subject for another post. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-41364428022822228852020-12-01T04:34:23.049+00:002020-12-01T04:34:23.049+00:00that's because you haven't actually unders...that's because you haven't actually understood the argument. Read it again. Frances Coppolahttps://www.blogger.com/profile/09399390283774592713noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-50857077631864339562020-12-01T03:41:19.177+00:002020-12-01T03:41:19.177+00:00So by the time Bitcoin stabilizes as an asset, it ...So by the time Bitcoin stabilizes as an asset, it will then crash because Tether will be removed.<br /><br />Bitcoin will not stabilize as an asset until it is adopted in a global capacity.<br /><br />By the time it is adopted in a global capacity, Tether will represent a fractional amount of liquidity and will not cause a crash.<br /><br />Argument doesn't make sense.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-34703819800870979142020-11-30T20:56:20.808+00:002020-11-30T20:56:20.808+00:00So this all goes back to Corrigan '83 "Ar...So this all goes back to Corrigan '83 "Are Banks Special" - they are because they can credibly issue demand deposits payable at par because of access to the Discount Window and FDIC insurance. Sounds like Kraken may be 'special' but Bitfinex is not.Carter the Examinerhttps://www.blogger.com/profile/03236360257016629080noreply@blogger.comtag:blogger.com,1999:blog-8764541874043694159.post-28105260765753043772020-11-30T18:00:05.035+00:002020-11-30T18:00:05.035+00:00I was waiting for the use of the phrase "run ...I was waiting for the use of the phrase "run on Tether". Great article!<br /><br />I've tipped you $5 Click here to claim it: https://sharetip.me/claim/c7UhovtYVocLiQxMW4GZE2Anonymousnoreply@blogger.com