There's some magic number for the price of Bitcoin, and it's hard to say what it is, where the miners start to lose money. If it stays too cheap for too long, it puts pressure on the miners to either switch to other coins or get out of the game entirely.
Things could get very bad, very quick. The only reason I don't have a bearish position in Bitcoin is that I can't find a counterparty that a.) I can afford at my account size (eg not CME) and b.) that I'm confident will still be around after this crash.
Stay cautious. Happy trading.
You would need to keep a small amount of ETH to operate the smart contracts, which could fluctuate in dollar value, but even after a black swan event, there's no reason that this decentralized infrastructure would not still be running, allowing you to redeem the USDC to real dollars.
[1] Circle dollars, 1:1 backed stablecoin from a well regulated issuer.
Also we've been there (mtgox's willy etc). I don't think bitcoin will be much less volatile any time soon. https://www.youtube.com/watch?v=XbZ8zDpX2Mg
People trying to get out of USDT into BTC because the USDT:USD parity assumption collapses will boost BTC:USDT prices, but probably not enough to avoid dropping BTC:USD, because it would be less than the USDT:USD drop, is the idea.
Thise specific USDT pairings would crash. If they wanted USD (as they presumably do), they’d then crash the other stable coin or backed pairings.
In the same way that there's no obvious ceiling to its value, if a lot of people try to get out of it at once, there's no obvious floor either.
Basically the market cap of BTC is not relevant here, but rather the daily volume.
Well, it will be an interesting week for sure.
Comparing with gold it's like the price has been inflated by people buying it with forged dollar bills.
That said the author seems a bit new to this all with his shock at finding Bob is likely being scammed. Bitcoin has been linked with scams almost from the start, certainly since 2014 with MtGox. Things will go on in spite of the scams.
Have you actually sat down and thought about this, even if 99% waited and cashed out over weeks, that 1% is still a huge injection into the ecosystem.
People have been shown time and time again that the money is there, the peg can hold, the underlying company is also a cryptoexchange that can print cash simply by existing and all haters have left is attaching their ego to this notion and clinging to the dream of it going bankrupt over night. And the more they are wrong the more they desperately cling to this idea.
Tether had $1B stolen from them when it was a significant % of their assets, along with the US govt taking other funds in the NYAG case and they easily survived, if not thrived.
These comments/stories on HN have been here for years and they don't age well, it's hilarious to watch.
You can all go short tether or bitcoin today for a fraction of a penny on the dollar, and yet, don't :/
Why not do it, you can hold a bitcoin future going short for the next year less than a coffee per / $1k, why not do that? Would surely make a great story.
Price in which terms? USD? USDT?
Suppose it turns out tether is a fraud. What will happen? Tether holders will try to sell it for USD or Bitcoin. High supply of tether will lead to higher BTC/USDT and higher USD/USDT rate. Those who managed to convert tether to BTC will likely try to convert BTC into USD. This will lead to relative over-supply of BTC versus USD and BTC/USD will decrease.
So you find an exchange that will allow you to short the BTC/USD (not USDT) pair and take a position. The liquidation price of your short is known to the exchange operators. If your position is large enough to create a problem for the whole scheme, the exchange owners can inform the Tether printers of your liquidation price, which they can use to squeeze you out, because they know exactly how high the price has to be to trigger your margin call.
If USDT:USD collapses, BTC:USDT will naturally go up, but it's also quite likely that BTC:USD (whether direct or indirect) will go down, to the extent it has been inflated by artificially inflated USDT:USD.
Genuinely curious about how could I do that. I am not that much into cryptocurrencies, so I appreciate if you have the time and will to be specific in the operationals. I do have a (currently empty) account at Kraken, if that helps.
How can I short BTC?
Assuming you have enough collateral, you currently even get paid money to hold a short.
As to your general point, I'd avoid holding the view that a 7 or so years old business can't fail as any kind of general truth. I know many smart people who are extremely bullish on cryptocurrencies, with huge investments. None of them think Tether will not fail one day. Everyone is playing the current market as a bubble.
If market craters and the counter party to your short disappears, where are you going? The SEC? Finra?
Honestly, you really have no idea.....
I shorted tether one time, on Kraken, and it was horrendously expensive, like 25% per annum. Do you know where it can be done cheaply?
Slightly positive predicted funding at the moment, which means you would get paid for shorting.
The amount of money & electricty wasted to generate a BTC is otherwise unrelated to the price of BTC in dollars or other assets.
Isn't it _directly_ related? If I'm a miner and the BTC I'm mining doubles in value I can afford to spend 2x as much money on hardware/energy and still make a profit.
I'm saying the fact that you have to waste $10,000 worth of electricity calculating redundant hashes in order to make a bitcoin doesn't mean that bitcoin somehow contains $10k worth of "value" or that the cost of production sets a floor on the price.
People sometimes get confused about this, perhaps reasoning by way of analogy with real-world goods that will (typically) never be sold for less than the cost of their inputs, or they imagine some computerized form of the labor theory of value applies[0], but this is not true. The only factors determining the price of bitcoin are supply (fixed) and demand (driven by speculation).
It amazes me how Bitcoiners scream 'hyperinflation' every time the Fed prints more money (with the goal of increasing prices by 2% annually) and yet struggle to understand the relationship between Tether printing dollar-denominated crypto-purchasing vouchers (with the goal of increasing crypto prices by as much as possible) and the supposed dollar price of BTC
This allows you to trade while minimising your exposure to the taxman, something that many people in crypto value.
Of course, there is the calculated risk of Tether being seized, but that's part of doing business.
Bitcoin itself was born out of active rebellion with the existing financial system, and depending on who you ask, rebellion of the state itself.
Go to a bitcoin meetup that's a few drinks in, and ask how many people pay taxes ;)
Stop feeding the beast.
Starve it every opportunity you have.
So the two core assumptions of your comment are dead in the water.
The transition from the system described in the 19thC as “capitalism” to the modern mixed economy was an adoption of socialism (while it wasn't mostly adopted as a coherent program but instead a series compromises between different factions, as a deliberate program it would have been a form of what Marx described—and opposed—as “bourgeois socialism”. And the Nordic .model, including the form in Sweden, leans into some of the socialized elements more heavily than is typical, with notably strong social safety nets and public pensions.
Say you make the yearly local equivalent of 150k USD, what is your income tax rate in Sweden?
Sure, like sheep on a farm, you're well tended to, but you basically live in a society where people exist to serve their government rather than the opposite.
That may not be your definition of the word "socialism".
Call it "collectivism" if that fits your definition better.
That won't change the fact that you're living in hell AFAIC.
Basically, if sweden is 'tax and spend' we're 'spend and future financial crisis'. I know which country I'd rather live in long term if I did not have a life to uproot here in the US.
There is a lot to unpack here and I surely don't want to keep going when the rhetorics is so loaded, calling others sheep and misusing terms won't lead to a healthy discussion.
We in the west have extremely luxurious societies but this isn't cheap. When a few rich people cheat on their taxes, a large number of poor people suffer.
Not paying your taxes is theft from the rest of us.
There’s a lot I like about the state! Yes, I admit it has many problems and frustrations.
But given we moved *away from the gold-standard, what is different now that makes it wise to accept a fixed money supply?
Not sure if I'm misunderstanding this though. It's hard for me to believe people buying and selling bitcoin wouldn't notice this somehow.
Things may have changed in the last two or so years though, so maybe Tether's role radically changed.
It will only create pressure on exchanges that allow you to actually sell USDT for BTC.
These will unfortunately be the same one that will likely go the MTGox route the quickest, leaving you a bag of virtual BTC that you can't withdraw.
Not your keys, not your coins, and doubly so for USDT.