How can I short USDT?

[LemonChiffon]

Subject says it all.  I think USDT will become worthless in the next year or two.  How can I short it?

[Quickseller]

You can short USDT on kraken. I believe they charge interest in the amount of 0.04% per day.

IMO, this is not a good trade.

[Wind_FURY]

OP, why would you want to short sell USDT, and what are you shorting it against? Is it not better to go long on Bitcoins on margin instead?

You can short USDT on kraken. I believe they charge interest in the amount of 0.04% per day.

IMO, this is not a good trade.

Kraken has a USDT/USD trading pair. Shorting that, if allowed, would be stupid.

[Quickseller]

The OP wants to short USDT against USD. He is wanting to effectively bet on USDT not being backed by USD on a 1:1 basis.

[TheQuin]

The OP wants to short USDT against USD. He is wanting to effectively bet on USDT not being backed by USD on a 1:1 basis.

I guess there are plenty of tinfoil hatters to take this trade but I cannot see why anyone would take the opposite side of the trade. USDT can't really go above 1:1 in value against the USD. If the conspiracy theory brigade succeeds in pushing the price far enough down I'd definitely be a buyer of discounted USDT.

[squatter]

The OP wants to short USDT against USD. He is wanting to effectively bet on USDT not being backed by USD on a 1:1 basis.

It's a bit more complicated than that. Despite Bitfinex adding a small Polish bank to its arsenal, Tether has made no announcements regarding redemption of Tether. If people could redeem at 1:1 easily, I don't think the USDT/USD rate would fluctuate as much as it does.

The market is very illiquid (thin order books), creating trade opportunities. It also gets pushed around by 1) demand for altcoins not offered on Kraken and 2) Bitfinex/Tether FUD. For instance, we have a 15% range on the daily chart:



This is my general take: During altcoin pumps, the USDT price spikes above $1 as traders use USDT to disperse to different altcoin exchanges. Historically, anything in the $1.03-1.07 range is a good short. It tends to hold ~ $1. That spike down to $.90 was due to the Tether hack. I wouldn't entirely discount further opportunities with all the FUD floating around.

USDT can't really go above 1:1 in value against the USD. If the conspiracy theory brigade succeeds in pushing the price far enough down I'd definitely be a buyer of discounted USDT.

It can go higher, as explained above. At the height of altcoin season earlier this year (May-June), it was holding above $1 for weeks at a time. One thing about buying "discounted" USDT: If it dumps heavily, just make sure you know why before you buy.

For example, if Bitfinex or Tether is facing trouble with law enforcement or regulators, I probably wouldn't want to be holding USDT. I don't like to trade it myself. It's one of those get in/get out kind of assets to me.

[TheQuin]

@squatter, Thanks for the reply. I don't actually have an account at Kraken so that was an interesting chart to see. Obviously, I take your point about keeping informed, I'm just indicating that at the moment based on the information out there rather than the FUD I would still be a confident buyer.

From that chart and what you say about liquidity, I think I'll stay away from trading it, but as you describe it does look like an easy play just to trade the reversion to the mean whenever it moves away.

[LemonChiffon]

Thanks for mentioning Kraken.

I contacted support and they informed me that I could short USDT/USD, but it would have to be on margin.

The margin rate is 0.01% per 4 hours which is 24.48% annualized (1.0001 ^ (6 * 365) - 1).

As an example, if I hold for one year, I would have to cover at $0.7552 just to break even.

In my view, the margin rate makes this trade unprofitable.

I would be willing to pay around 10% annualized.

[manchester93]

Thanks for mentioning Kraken.

I contacted support and they informed me that I could short USDT/USD, but it would have to be on margin.

Shorting always requires margin because it requires borrowing. You are borrowing USDT to sell short in this situation.

The margin rate is 0.01% per 4 hours which is 24.48% annualized (1.0001 ^ (6 * 365) - 1).

As an example, if I hold for one year, I would have to cover at $0.7552 just to break even.

In my view, the margin rate makes this trade unprofitable.

I would be willing to pay around 10% annualized.

For sure, that's crazy expensive. Only justified if you are trading intraday or at least only holding for a few days. There are much better opportunities in crypto trading than speculating on USDT....

[Wind_FURY]

The OP wants to short USDT against USD. He is wanting to effectively bet on USDT not being backed by USD on a 1:1 basis.

I guess there are plenty of tinfoil hatters to take this trade but I cannot see why anyone would take the opposite side of the trade. USDT can't really go above 1:1 in value against the USD. If the conspiracy theory brigade succeeds in pushing the price far enough down I'd definitely be a buyer of discounted USDT.

How much does the OP really think he can make from such a trade? It would be better to trade altcoins and profit more from the volatility, assuming that he is a good trader.