crasl

That's what I believe too, but once thing I don't understand is you would think by doing so they would depress the price on USD exchanges, and eventually cause the price to decouple between USD and USDT, but that doesn't seem to be happening this time.

There exist a pretty huge number of OTC desks in SE Asia (mostly in China) that deals with USDT, they provide significant liquidity and could feasibly support cashing out of the arbitrage bots.

Also, because the order book is pretty thin on most exchanges, it may not take much arbitrage for the USD price to catch up.

Add Wirecard to the pile too!

>But how? Let's say I have one BTC. You offer me 15k USD to buy it, I say no. You say, ok, what about 18k USDT (that you just printed)? I reconsider and say, yeah, ok. So you inflated the price ok, but then what?

It doesn't really work like that. It's more like: you see BTC being traded at 15k, and you refused to buy because that's ridiculously high. Two days later, the price pumps to 18k (which is, at least partially, caused by Tether printing). Now FOMO kicks in and you saw a tweet by some rando that says that Bitcoin will breach the ATH and get to 25k for sure due to his TA. You decided to buy in at 18k.

Notice that in this entire thought process, there's no difference between USDT price and USD price. They are considered one and the same, at least in the vast majority of traders, holders, miners and crypto media.

Now, you may have access to USD exchanges like Coinbase, but many people don't. For those, their only FOMO option is USDT exchanges like Bitfinex, which means they need to buy USDT first, which means the Tether ecosystme just got some new cash inflow and someone else got to cash out their USDT.

I think the accurate answer at this point is we don't know for sure. It depends on how plausible you think it is that Tether has received ~$14b inflow in the past 6 months.

> But to buy bitcoin for tether, you first need someone to sell bitcoin for tether. And this guy then has tether. What is he going to do with the tether?

He may not have an off-ramp (which means he can only sell the Tether to someone else, either directly or using cryptos as a bridge). He might be a crypto trader or even trader of other kind of merchandise and need the liquidity provided by Tether (which is for all purposes, "real" as long as the entire thing doesn't collapse)

Majority of the USDT volume come from SE Asia where countries often have strict capital control, and in these situations USDT or cryptos do provided utility by allowing people to circumvent the capital control. That's also why there's a crackdown of crypto OTC desks in China reported a few weeks ago.

Exactly. With USDT, your aim is to buy crypto low and sell them high and become bigly rich, THEN you cash out (which is the end game). It's just greed.

Notice that the general confidence in the crypto ecosystem (HODL culture), and in Tether itself (it's just a FUD, it's been so many years and nothing have happened) contribute to the desirability of USDT. Also notice that when I say cash out, I'm not talking about redeeming USDT, but buying crypto then selling the crypto on an exchange or OTC that has an off-ramp.