How To SURVIVE The Coming Tether ($USDT) COLLAPSE!

Tether ($USDT): A Single Point Of Failure For The Crypto Industry

Vitalik mentioned Tether in the past, calling it a “ticking time bomb” for Bitcoin (BTC).

However, Vitalik didn’t analyze the effect of a Tether implosion in the overall industry, especially in Ethereum DeFi, a predominantly USDT-based market.

Considering the volumes of Tether ($USDT) trades in top Ethereum DeFi platforms and the tokens circulating in the Ethereum blockchain, all will sustain a severe blow if or when Tether collapses.

While from Vitalik’s perspective, Tether (USDT) is a problem concentrated in the Bitcoin (BTC) community, Ethereum, Tron, and the rest smart-contract networks will suffer the same or even worse consequences in case it implodes.

A Tether ($USDT) depeg from the dollar will deliver catastrophic results in the industry, sparing nothing.

Tether’s Secret Hot Sauce

Perhaps Tether gave Bitcoin (BTC) room to breathe for a while in 2018, still, more factors contributed to the 2019 mini bull run which supported prices and temporarily renewed interest in cryptocurrency before the third Bitcoin (BTC) halving.

From that point, Tether transformed massively, printing $80 billion in USDT tokens throughout 2020 and 2021. An $80 billion company that never conducted an audit with an independent accounting firm and never publicly released information concerning its reserves (besides a general pie-chart covering the main distribution percentages).

According to Tether’s CTO and spokesperson, Paolo Ardoino, Tether’s reserves and partners are its “secret sauce”, a statement that creates worries and speculation.

Tether responds to speculation by claiming it is all false news and an attempt to undermine its business practices and model, which is even more alarming since the company avoids openly discussing the structure of its reserves.

As John Reed Stark suggests, this behavior is identical to the practices of funds and companies that utilized improper procedures and lead to shocking discoveries.

In November 2021, Protos published an extensive study of Tether distribution among various financial entities operating in the cryptocurrency industry, highlighting that about 60% of Tether in circulation is allocated to Alameda Research (FTX), Binance, and Bitfinex.

Cumberland also holds a substantial USDT amount, as the Proton study suggests.

Cumberland, a crypto asset trading company and a subsidiary of Chicago-based DRW, was one of the first trading businesses using High-Frequency Trading (HFT)to enter the cryptocurrency field in 2014.

These businesses provide liquidity to the cryptocurrency ecosystem with the use of Tether.

Nobody knows how these deals work or the reserves and assets exchanged for Tether. Protos brought to light these Tether partners Protos, but there are more.

Analysts often link Tether with the price action of Bitcoin BTC and suggest a correlation between the minting of USDT and rising prices of Bitcoin in cryptocurrency exchanges.

These suspicions are further fueled by a conversation leak of Tether’s CFO Giancarlo Devasini back in 2018, with Tether redemptions at risk and the price of BTC in danger of dropping below $1,000.

BTC could tank to below 1k if we don’t act quickly

-Bitfinex & Tether CFO “Merlin”, Giancarlo Devasini (October, 2018)

And quickly Tether acted as the market recovered from what would have been a fierce blow. Dropping fast to $1k would mean BTC was going to revisit the 2013 price range. It was a similar pattern that BTC did not avoid this year, as it is currently trading at the (top of the) 2017 price range (below $20,000).

Things Go South

(Source: Magical Quote)

The facade of a lustrous market will collapse together with Tether, as the price of most cryptocurrencies will immediately dive and find no bottom before the ground.

Such an incident will uncover the inherent flaws of a speculative market and wash away the fake narrative of a self-sustained store of value asset.

While a Tether collapse (in the beginning) will be fatal for every cryptocurrency, the effect will not be the same for all in the long run.

Bitcoin (BTC) will not be the most affected initially. In the short term, everything will suffer depending on the exposure to USDT.

However, those blockchains that work toward a certain goal will survive the fall and start behaving positively again.

In 2017, Tether’s effect on the cryptocurrency market was limited. Stablecoins sustained less than a billion dollars market cap (combined), and yet, the market exploded to all-time high valuations with numerous projects achieving significant adoption and userbase.

The network effect of 2017 had no Tether involved, but the technological progress of blockchain networks had entered a more mainstream era, appealing to the public on its utility.

In Conclusion

Since no funds enter the market from the beginning of the year, stablecoins support the prices even at the current levels, 70% lower from its 2021 ATH.

After the UST and Luna fiasco, exchanges will not sustain a new blow of Tether collapsing, and the outcome will be severe for the entire sector:

- Immediately halt all trading and restrict deposits/withdrawals
- Force log out of all users and enter a lengthy period of maintenance.
- Exchanges, as usual, will try to serve their top customers first but there won’t be room to maneuver with USDT dollar price at zero.
- Many exchanges will collapse due to this effect. Risk of losing crypto held in exchanges.

From My article: Tether ($USDT): The Doomsday Scenario!

However, it will also wash away the problematic functioning of the cryptocurrency market. Perpetual futures exchanges are gambling services that manipulate prices at the expense of traders and investors.

BTC whales with Tether overwhelming digital resources short to the ground competitive to BTC projects (Bitcoin Cash, Monero, ZCash) that work flawlessly while these contain robust networks and rising adoption.

All these severe market flaws will be corrected, although it will take time before the fallout from Tether’s implosion cools down.

• Cover Photo by “DeSa81” on Pixabay, and “xresch” on Pixabay (modified)

Posting on:
● read.cash ● noise.cash  ● Medium ● Hive ● Steemit  ●Vocal 
● Minds ● Publish0x ● Twitter  ●Reddit

Copyright Disclaimer:
Material published in this content, is used for entertainment and educational purposes and falls within the guidelines of fair use. No copyright infringement intended. If you are, or represent, the copyright owner of images used in this article, and have an issue with the use of said material, please notify me.

Don't forget to Subscribe and Like if you enjoyed this article!