Tether collapse journal

Specterx said:
A run on Tether would create absolute, utter panic across the crypto space. The first immediate problem would be that most, if not all major exchanges would become paralyzed as they'd be forced to suspend withdrawals and trading of certain coins (or trading entirely). Prices would go crazy as exchange IT systems and trading engines seized up and failed under the load; verification of transactions on the chains could be hours behind the exchanges. The market would splinter as some venues freeze up, some go dark, and desperate traders flood the remaining live ones to cash out whatever they can by any possible means. Liquidity (at least on the bid side, lol) would vanish entirely as pro crypto trading firms and MMs are suddenly confronted with a shattered market unable to process trades, and where winning derivatives bets won't be paid out because the counterparties are bankrupt - exactly like 2008 but sans government intervention. BTC spreads would explode out to several thousand dollars, and the volatility would be insane, with a single-day $20k range easily in the cards.

Most secondary coins would fall by 90%+ in one day, or in effect cease trading. On those venues where a more or less continuous market did remain functioning, my guess is we'd see BTC initially stabilize around $10k. However, this wouldn't be the end of the bear market; with the crypto ecosystem in ruins and the narrative busted, the HODLers would start limping home and the space would be staring down years of brutal bankruptcy proceedings and lawsuits. Ongoing BK cases would result in periodic mass coin dumps into whatever market remained, crushing the price over and over. Many leading figures in the crypto space will be facing criminal indictments in more than one country. Institutional and investor revulsion would put an end to talk of "institutional adoption", or an American crypto ETF. In the next 2-3 years, Bitcoin would definitely fall below the 2018 levels of ~$3k and I wouldn't be surprised to see it back below $1k.

That's if Tether fails. If not, the bear market will be nasty but not so cataclysmic as described here.
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Interesting, thanks.
The same e-wavers who predicted Crude Oil would go negative posted this chart,

Screen Shot 2022-05-09 at 12.13.11 PM.png
 
The burning of tethers should be natural, that is how the system supposed to work. What has been unnatural is that for years, they almost never burnt any. Now suddenly 7% of the supply is gone.
 
Tether USDT is the one I prefer to hold out of all the stablecoins. I usually hold more USDT than USDC
  • It has the best liquidity
  • It's accepted in most web3 platforms (i.e. defi yield farming or dex trading platforms)
  • It's on most if not all the major L1 blockchains
  • It's on most if not all the major centralized exchanges
  • I get the most value as close to $1 as any stablecoin, i.e. less slippage on trades (see first item)
People who do not use cryptos would not understand all of these
 
I will save it here for prosperity, pretty long read:

https://www.kalzumeus.com/2022/05/20/tether-required-recapitalization/

"As an example of an asset which is certainly impaired: Tether has invested $62.8 million of the reserves into Celsius Network, including $52.8 million into their Series B of October 2021. (I am indebted to Intel Jakal for some legwork here.)

Celsius is in free-fall due to the current market dislocation; the value of their native token is down by over 86% since their Series B. Clearly, that investment has suffered more than $20 million in impairment. Impairment of 1% of one line item on their balance sheet ate more than 10% of their equity, under assumptions which are extremely generous to Tether."
 
I think it's entirely possible the Tether company stole $30 Billion but no one may never know

Unlike banks who leverage the deposits 30 to 1 every USD deposit, Tether only issues 1 USDT per 1 USD deposit (and burns an equal amount in reverse per redemption)

Most of the USDT are not in redeemable form. They're in local wallets and DeFi Web3 platforms (i.e. liquidity pools, staking for yields, etc)
 
Thanks for posting. I have been thinking that $12-16K would be a target for BTC. The big, risky bets by Michael Saylor (MSTR) and El Salvador need to be challenged -- it's almost like a law of the markets that stupid, risky behavior will eventually be punished.

Had a good friend who lost a lot in Luna which made me take a look at Tether more closely. At a minimum, it's a big risk that's out there -- even if just the regulatory risk. Given that all the major cryptos are in serious downtrends, I'm a spectator in this space right now. I'm not anti-crypto but I'm also not a true believer. Heck, if Tulips were in a defined uptrend, I would be a buyer but this isn't the time to just stick your head in the sand and say "HODL."

Ever notice that whenever someone is critical or skeptical of crypto the typical response is "You just don't get crypto."

Financial stress in the system always exposes the darkness so we'll see what other things get exposed here this year.

By the way, I like @johnarb. I think he's a decent guy. I give him some props for getting into some crypto and NFTs before everyone else. Where I disagree with him is that I believe these are just vehicles of speculation, nothing more, and that it's quite possible all of his holdings have already hit their all-time peak. Only time will tell.

Finally, I encourage everyone to read "The Zurich Axioms" -- it's one of the best books on the mindset of market speculation out there.

Should be an interesting year.


Van_der_Voort_4 said:
Interesting, thanks.
The same e-wavers who predicted Crude Oil would go negative posted this chart,

View attachment 284781
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