Surviving Tether

The Big Short: Institutional Investors Are Betting Against Tether USDT

I know, Tether has survived before; but how? and why?

There are other USD-stables now, so Tether can retire - job done. But, there's too much money involved, so it probably won't go quietly. Also, with derivatives volumes now higher than spot, Tether's role as Bitcoin-pumper can also be retired.

Throughout 2022, several hedge funds bet against Tether. These include Fir Tree Capital Management, Viceroy Research, Valiant, etc., with even more hedge funds considering it.

OK, we've seen how smart these guys are not.

Viceroy is a short seller that had previously bet against German company Wirecard AG before it collapsed. According to the founding partner, Fraser Perring insists that something is wrong with Tether. “We know every good short of ours, they’ve obfuscated something.”

However, one issue is what instrument to use to short something like Tether. Being a stablecoin means there is little volatility to trade with - shorting such a coin is an all or nothing bet - and who is going to take that bet? Who is willing to be the counterparty, and at what price?

Speaking on the hedge funds betting against it, a spokesperson for the firm [Tether] said they are involved in a “clever scheme to raise capital from those less knowledgeable by leveraging on disinformation with the end goal of collecting a management fee.”

Isn't that a really good definition of most of crypto!? It's a pretty good definition of Tether, at least.

I would have a good look at your own exposure to USDT. Look how vulnerable so many platforms are, especially exchanges that seem obsessed with listing coins paired with either BTC or USDT. I have thought for some years that the destruction of USDT would be the final crypto apocalypse. Not so easy to do, as Tether has spread itself across a number of networks; but it could be done if one network turned on the coin.

Also note that even holding US Treasury bonds is very from being a "safe haven". Those bond prices have tanked as interest rates have risen. So... Tether, show us the money!

Don't trust, verify.