Crypto Market Roiled by New Allegations Against Tether, Bitfinex

Re:Crypto Market Roiled by New Allegations Against Tether, B... by JumpCrisscross on Friday April 26, 2019 @01:32AM (#19755078)

> it still trades 1:1 to USD today

On exchanges of questionably integrity. And where it is impossible to reliably short the instrument.

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Re:Crypto Market Roiled by New Allegations Against Tether, B... by panarky on Friday April 26, 2019 @10:46AM (#19758070)

> impossible to reliably short the instrument

I see this a lot, if you can't sell short then the price can't decline?

If I held Tether and thought it was worth less than $1.00, I would sell it.

If most people think it's worth less than $1.00, they would sell it and the price would drop to reflect the risk.

Why doesn't this happen? Is is just crooked exchanges posting phantom orders? If so, why don't smart traders sell into that and liquidate?

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Re:Crypto Market Roiled by New Allegations Against Tether, B... by JamesBarney on Saturday April 27, 2019 @04:50AM (#19764585)

The problem is beliefs aren't homogenous. If 99% the world that tesla was worth $0 and 1% thought it was worth $100, then without short sellers the price would trade much closer to $100 than 0. But if there are short sellers than the beliefs of the market start to average out more.

Also there is empirical proof short selling matters because during the banking crises they banned short selling which causes certain bank stocks to jump up, and then when they allowed it again the prices fell like a rock.

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Re:Crypto Market Roiled by New Allegations Against Tether, B... by askmike on Friday April 26, 2019 @04:31AM (#19755678)

You mean Kraken? There are many OTC lending markets that allow for tether shorting.

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Re:Crypto Market Roiled by New Allegations Against Tether, B... by reitzensteinm on Friday April 26, 2019 @05:38AM (#19755920)

Seems like counterparty risk would make this a bad trade; if Tether collapses, the whole system is likely to follow.

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Re:Crypto Market Roiled by New Allegations Against Tether, B... by askmike on Friday April 26, 2019 @07:21AM (#19756327)

I don't think many people assume it to be this binary: if Tether doesn't have have dollars behind every USDT. Buying USDT below $1 is simply buying debt. If you believe they will at some point in the future be able to give you a dollar for every tether, buying under $1 is very smart.

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