The Big Tether Short

[Pekelo]

https://decrypt.co/94866/4-billion-hedge-fund-shorting-tether-stablecoin

https://www.bloomberg.com/news/arti...tree-bets-big-with-short-of-stablecoin-tether

https://coinjournal.net/news/hedge-fund-shorts-tether/

https://www.reddit.com/r/path%3D%252Fr%252FButtcoin%252Fcomments%252Ftdcso9%252F

Q: If Tether effectively prints its own money, can't they just break the short squeeze by coming up with another billion or two out of thin air?

A: No.

They short the tether backing (junk bonds). When the bond value goes down it gets difficult to sell them which makes it hard for tether to keep the peg to the dollar.

If someone tried to redeem tethers now, Tether would have to sell their bonds at a huge discount and crash the bondprice even more. The fund could buy back the bonds for pennies and make a profit and the tether backing would vanish into moneyheaven.

If tether printed tethers in response to a breaking peg, the peg would just vaporize, so that does not work.

 

[The_Krakenite]

The fact that people still 'hold' tether as some sort of investment... is what gives me confidence in that there is still so much dumb-money out there to take advantage of.

EMH was a theory that is just laughable now when you think of it.

 

[traider]

Tether can just refuse to honor the redemptions or take forever processing it

 

[RedDuke]

Tether can just refuse to honor the redemptions or take forever processing it

Yep they say it openly in their papers.

 

[David's faith]

If Tether would go down - would it take BTC down too?

 

[Sprout]

Yep they say it openly in their papers.

Just like a bank.

A family member had a couple K in an interest bearing checking account that she didn't touch for a couple years. Wanting to have that money work harder for her, since she made less than $1 in interest, she decided to close it out and invest it. Well, the branch that she opened it was "temporarily" closed (since covid lockdowns - 2yrs) and the next branch had her wait for 1hr and then proceeded to tell her, her funds have been moved into "dormant" status, inaccessible and to return in a couple of business days.

After she returned, she waited for yet another 1/2hr before they said "check in two weeks or cashier's check now"?
After insisting on cash now, another 1/2hr went by and the cash was delivered yet they asked her to remain until yet another form was signed. She took the cash, left and had a similar realization but hers were with the banking system.

Any bank deposits are only redeemed at their discretion and on their timeframe, no guarantees.

It says so in the fine print of the ToS.

So Tether is backed by a mix which includes commercial paper, so what?

 

[Sprout]

https://decrypt.co/94866/4-billion-hedge-fund-shorting-tether-stablecoin

https://www.bloomberg.com/news/arti...tree-bets-big-with-short-of-stablecoin-tether

https://coinjournal.net/news/hedge-fund-shorts-tether/

https://www.reddit.com/r/path%3D%252Fr%252FButtcoin%252Fcomments%252Ftdcso9%252F

Q: If Tether effectively prints its own money, can't they just break the short squeeze by coming up with another billion or two out of thin air?

A: No.

They short the tether backing (junk bonds). When the bond value goes down it gets difficult to sell them which makes it hard for tether to keep the peg to the dollar.

If someone tried to redeem tethers now, Tether would have to sell their bonds at a huge discount and crash the bondprice even more. The fund could buy back the bonds for pennies and make a profit and the tether backing would vanish into moneyheaven.

If tether printed tethers in response to a breaking peg, the peg would just vaporize, so that does not work.

lol, they are going up against BTC Maxi's - much more of a diamond hand then the WSB's crowd.

It's irrelevant anyway, tethers aren't really redeemed, just a waystation to facilitate token transfers to other digital assets.

 

[RedDuke]

If Tether would go down - would it take BTC down too?

yes in a massive way, the whole crypto market. As of recently Tethers represented 70
Percent of daily volume.

Think of it, fake money represent 70% of volume.

 

[Nobert]

yes in a massive way, the whole crypto market. As of recently Tethers represented 70
Percent of daily volume.

Think of it, fake money represent 70% of volume.

Edit : tho, just because it's a 4B fund means nothing, if, we don't know the size of position.

 

[Specterx]

Hedge funds jumping in is pretty much the last thing you want to see, as the proponent of a given thesis.

That said, it's an interesting bet since there's no actual "upside" to Tether in USD terms. The only risk seems to be your borrow rate - 5, 6% per year?