Whenever Bitcoin has a bull run, naysayers try to cope with missing the boat by rationalizing why it will fail through “Fear, Uncertainty, and Doubt” (FUD). Most of these are completely unsubstantiated, but annoyingly persist as negative narratives Bitcoin must fight against.
That fallacious FUD article and the ridiculous comments of Janet Yellen creating a fantastic 'buy the dip' opportunity this morning which I fully capitalized on. Your rebuttal article sets the record straight and will give the community the confidence to buy and HODL on. Thanks for all you do!
"If Tether was found to be worthless tomorrow, guess what would immediately happen to the price of Bitcoin? It would skyrocket as Tether holders convert $24B of Tether into Bitcoin."
You speak very eloquently, but there is one area I don’t feel comfortable with.
You say : "Tether is at least partially backed and has functioning wires in and out of the bank they use.”
Is it enough to assert that USDT is not a huge threat to the whole crypto space ?
Tether Inc. eventually disclosed its balance sheet in May 2021. Almost all of their “reserves” are in some form of loan to a commercial company (corporate bonds, commercial paper, secured loans, repo market (!!!)) and only around 5% are in assets whose value we know (cash, T-Bills).
Additionally, non-USD reserves for a stablecoin are a problem. As noted by Frances Coppola, “it’s dangerous to guarantee to clients that something is worth $1 when your assets backing it are not dollars. The value of the USD changes very little. The value of crypto changes a lot”.
To quote Bloomberg “a sudden loss in confidence in Tether would likely generate a liquidity shock to BTC markets”.
So my question is : what would happen if a sudden loss of confidence led to a “Tether run” to redeem those dollars ? will the exchanges let “Tether holders convert $24B of Tether into Bitcoin” as you said ? Wouldn’t that be another Lehman Brothers ?
Amazing article Dan. I'm kind of late to this article. I would like to ask for advice from you and fellow readers.
I am a small retail investor and I have been buying small amounts of bitcoin since March 2020. I would like to know if there is a day when Tether crashes, how will crypto lending companies be affected in your view?
I gave in early this year and transferred my BTC to such exchanges to try to earn BTC as interest. My gut feeling in addition to the risk of the exchange being hacked, if these companies rely heavily on stablecoins, there will be an issue in getting my BTC back.
My idea is to transfer back the majority of my BTC to cold storage soon ( probably within the next month) as even though after the recent price drop, it still has grown into a significant part of my wealth. I would also love to hear your view on this or are there any other steps small retail investors like me can protect ourselves in such scenarios.
what an incredible piece Dan! Thanks for the brilliant insights.
That fallacious FUD article and the ridiculous comments of Janet Yellen creating a fantastic 'buy the dip' opportunity this morning which I fully capitalized on. Your rebuttal article sets the record straight and will give the community the confidence to buy and HODL on. Thanks for all you do!
Great article Dan!
Absolutely lootly a great explain which will help many. Thx Dan!
Thank you for bringing light to this issue!
"If Tether was found to be worthless tomorrow, guess what would immediately happen to the price of Bitcoin? It would skyrocket as Tether holders convert $24B of Tether into Bitcoin."
If it's worthless, how is $24B pumped in??
You speak very eloquently, but there is one area I don’t feel comfortable with.
You say : "Tether is at least partially backed and has functioning wires in and out of the bank they use.”
Is it enough to assert that USDT is not a huge threat to the whole crypto space ?
Tether Inc. eventually disclosed its balance sheet in May 2021. Almost all of their “reserves” are in some form of loan to a commercial company (corporate bonds, commercial paper, secured loans, repo market (!!!)) and only around 5% are in assets whose value we know (cash, T-Bills).
Additionally, non-USD reserves for a stablecoin are a problem. As noted by Frances Coppola, “it’s dangerous to guarantee to clients that something is worth $1 when your assets backing it are not dollars. The value of the USD changes very little. The value of crypto changes a lot”.
To quote Bloomberg “a sudden loss in confidence in Tether would likely generate a liquidity shock to BTC markets”.
So my question is : what would happen if a sudden loss of confidence led to a “Tether run” to redeem those dollars ? will the exchanges let “Tether holders convert $24B of Tether into Bitcoin” as you said ? Wouldn’t that be another Lehman Brothers ?
Thanks a lot
Amazing article Dan. I'm kind of late to this article. I would like to ask for advice from you and fellow readers.
I am a small retail investor and I have been buying small amounts of bitcoin since March 2020. I would like to know if there is a day when Tether crashes, how will crypto lending companies be affected in your view?
I gave in early this year and transferred my BTC to such exchanges to try to earn BTC as interest. My gut feeling in addition to the risk of the exchange being hacked, if these companies rely heavily on stablecoins, there will be an issue in getting my BTC back.
My idea is to transfer back the majority of my BTC to cold storage soon ( probably within the next month) as even though after the recent price drop, it still has grown into a significant part of my wealth. I would also love to hear your view on this or are there any other steps small retail investors like me can protect ourselves in such scenarios.
Thoughts on this?
https://ag.ny.gov/press-release/2021/attorney-general-james-ends-virtual-currency-trading-platform-bitfinexs-illegal