Hey friends, if you own crypto, I want to mentally prepare you so you wouldn’t panic when it happens Here is the problem.
Tether aka USDT is not safe. Fyi, I have a very good track record for calling out shit and there after prices fall. From Nikola, Hyliion, Coinbase, QS… the list goes on…. Tether is the 3rd biggest crypto currency after Bitcoin and Ethereum. USDT is a type of stable currency.
Tether is suppose to maintain a peg of 1 to 1 against the US dollar. Meaning for every 1 Tether, there must be 1 real US dollar held somewhere in a bank. If the issuer of tether keeps printing tether without real USD.
It’s like you having a money printer athame. For the short term, it feels freaking good. For the long term you will burn everybody who used your money discovering it’s fake. In the beginning, tether was suppose to maintain the peg of 1USDT to 1USD. Now, tether has only 3.87% cash. The rest are so damm sketchy. Secured loans? hey common, the guarantee is as good as the guarantor.
The main bulk goes to Commercial paper. It’s a common form of unsecured, short-term debt issued by a corporation. It doesn’t sound any shitter. Unsecured, short term. I can use my company now and issue 100m worth of debt and declare I’m worth 100 million. How long will this go on? Like all Ponzi / scams.
It can go on for a long long time like Bernie Madoff. There is this crazy organisation chart where Digifinex Inc owns Bitfinex Ltd and Tether Ltd. On one side, you own a brokerage, on the other side you print money.
I mean come on! It’s like ownself check ownself, ownself print money give ownself. We come back to the question, how will the crash of tether affect the crypto markets? If it happens today, it’s going to be very bad.
Tether is the main liquidity provider. To simplify this, you have some diamonds and you want to buy a house. You can’t use your diamonds to directly buy a house. You need to convert diamonds to dollars and dollars to house. Tether is the dollars of the crypto world. If it goes down today, it’s going to shake the entire eco system.
However, If it goes down maybe 2 years from now, I would argue and think it might have less of an impact. Because people are starting to move away from Tether. The alternative would be BUSD or USDC. Both audited by legit companies and main tainsa Peg of 1 USD to 1 BUSD or 1 USDC.
Coffeezilla did an amazing job covering this topic in detail, As a crypto investor yourself, selling everything waiting for tether to crash. To be I don't think it's a good idea. Crypto markets could go up another 1000% and drop 50%, you will be still up.
Just invest in assets which gives you the most confidence because the fundamentals are great and let time do it’s job. Crypto, you like it for not, it’s here to stay and if it’s here to stay, it’s going up over the long term is pretty clear Hope you learn something, appreciate the thumbs up, as always invest safe.
When it comes to Tether USDT I have been waiting for news I know that they decided to settle around 18m fine but I don't know if there are other things that the US government can do to bring the Tether printing machine down. I know that the only thing that BTC has going for is price but if USDT is manipulating the price and the printer goes away the price of BTC could collapse which will make in turn make people think twice and actually study what Bitcoin BTC really is which will, in turn, show that BTC is no longer Bitcoin and that high fees and the usage of custodian services are not an OKAY thing at all.
I think that only a massive collapse will open the eyes of investors who believe that custodian solutions are the way to go for the majority of users while making the correct usage of LN a luxury and leaving everyone else to only use custodians because of transaction fees.