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.
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?