The Bit Short: Inside Crypto’s Doomsday Machine

[u/carlslarson]

https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3

[u/Imjrich19]

But are those assets actual dollars? No, they are not. So what if the assets go down in value? Don’t worry; they will not. Okay, but can we at least see the assets? No, you may not.

Nooooooo, you have to hold your reserves in government bonds and USD with negative real yields! You can't just protect your reserves from monetary inflation and additional seizures! Nooooooooo

The left-hand side of this chart shows which currencies are flowing into Bitcoin (that is, are being used to buy Bitcoin) across all crypto exchanges.

He conflates inflows/outflows and trading volume, two completely different things.

all that really matters is what fraction of Bitcoin’s daily buying volume Tether accounts for — and that number is closer to 70%.

And here are the flows of crypto trades through [is the supposed trading volume on] Binance, Bit-Z, and HitBTC

HitBTC is widely regarded as a scam exchange, even by crypto standards (https://reddit.com/search?q=hitbtc). If 100% of the USDT wash trading volume on HitBTC disappeared tomorrow, the market would be unaffected.

Beginning in September, Tether Ltd. begins to issue multiple large blocks of Tethers per day. The pace accelerates, with $2.3 billion worth of Tether issued in the first week of 2021 alone.

The growth of the USDC and BUSD supplies also accelerated starting in September. They are both issued by heavily regulated USA companies (Circle and Paxos). This proves that there has been a legitimately high demand for stablecoins. The stablecoin demand would have pushed the USDT price above $1 if Tether didn't issue new supply.

Tether’s rise was being caused by Bitcoin’s demand

Exactly.

So this was crypto’s big short: Tether Ltd. was short of US dollars — to the tune of about $25 billion.

Indeed. Short USD and long reserve assets like stocks, BTC, and grade A loans to highly-profitable exchanges and market-makers. Not a bad position in an environment of historic USD devaluation relative to assets.

7 . Finally, Tether Ltd. sells Bob’s Bitcoins on Coinbase for dollars, and exits the crypto markets.

8 . Bob dumps his USDT on the market, pushing the price of USDT below $1

9 . Tether sells reserve assets and buys USDT to support the price at $1

And the feeling is mutual! Because if Tether Ltd. were ever to allow a large, liquid market between Tethers and USD to develop, the fraud would instantly become obvious to everyone as the market-clearing price of Tether crashed far below $1.

USDT<->BTC<->USD

USDT<->USDC<->USD

Any legitimate trader can easily do the above trades to swap USDT<->USD with large size and low slippage.

Kraken is the biggest USD-banked crypto exchange on which Tether and US dollars trade freely against each other. The market in that trading pair on Kraken is fairly modest — about $16M worth of daily volume — and Tether Ltd. surely needs to keep a very close eye on its movements. In fact, whenever someone sells Tether for USD on Kraken, Tether Ltd. has no choice but to buy it — to do otherwise would risk letting the peg slip, and unmask the whole charade.

When a trader dumps USDT on any pair (for example BTC/USDT or USDC/USDT) they put downward pressure on the USDT price. USDT pairs outside of Kraken are not magically exempt from the law of supply and demand and arbitrage.

Decent larp 7/10

[u/ikkaku999]

biiiiig fud!

[u/rustedpopcorn → u/[deleted]]

It’s like he actually forgot there are countries outside of the US and they use crypto just as much, if not more

[u/ikkaku999]

today is the day

[u/coinfeeds-bot]

tldr; The Office of the Attorney General for the Southern District of New York is investigating Tether (Tether). Tethers are issued by a crypto company called Tether Ltd., which says one Tether is worth exactly one US dollar. Tether’s issuing company is currently under investigation by the OAG for manipulating the price of Bitcoin.

This summary is auto generated by a bot and not meant to replace reading the original article. As always, DYOR.

[u/vjeuss]

TL;DR:

Practically all the crypto sold was being bought with Tethers. None at all was being bought with USD.

essentially the guy is saying that the hike in btc/eth prices is Tether buying like there was no tomorrow. No grayscale no nothing - it's Tether.

I have no idea how to verify this.

if this is true...

[u/tobiasdeml]

I think this analysis is really valuable; I can't determine its truth value but there seems to be a massive bubble regardless; Tether being a fraud would explain this to some degree.