Bitcoin price- If Tether (USDT) go down, will it be good for Bitcoin?

[Person610]

Read an article on another lawsuit on Bitfinex controlled Stable coin Tether (USDT).

https://news.bitcoin.com/bitfinex-and-tether-receive-another-class-action-lawsuit-in-us-courts/

The operators of the cryptocurrency exchange Bitfinex and the stablecoin Tether have notified users that they were hit with another class action lawsuit in U.S. courts over market manipulation allegations that the companies are trying to frame as mercenary and baseless.

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

[bitmover]

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

Ofc it will not be good.
Tether is a tool to buy and trade bitcoin and other cryptocurrencies.
THere are other stable coins already, which is good. As the whole cryptocurrency ecosystem doesn't rely only on tether.

However, if tether breaks and it turns out to be not backed up by USD, a lot of fear will dominate the market and bitcoin price will fall down in the short term.

But in long term it doesn't affect the whole scheme of things

[NathanJB]

Read an article on another lawsuit on Bitfinex controlled Stable coin Tether (USDT).

https://news.bitcoin.com/bitfinex-and-tether-receive-another-class-action-lawsuit-in-us-courts/

The operators of the cryptocurrency exchange Bitfinex and the stablecoin Tether have notified users that they were hit with another class action lawsuit in U.S. courts over market manipulation allegations that the companies are trying to frame as mercenary and baseless.

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

It will have an effect but I think it will not really cause a massive dump in the prices of Bitcoin and altcoins. In fact I think the opposite is true. It will somehow expand the market cap of Bitcoin and altcoin. There are so many crypto traders who are choosing or trading USDT against other cryptocurrencies because it is stable. But if it will go down, these traders will be forced to take their money from USDT and transfer them into Bitcoin or altcoins. The trade will be much better this way rather than vs the USDT.

[Hueristic]

Of course it will be good short term as all the usdt will flee and guess where its going to go?

[LUCKMCFLY]

Regarding the legal problem, I don't think that will prosper, Bitfinex is an Exchange that has many traders who have placed their full trust there, and in my personal experience I have seen that most Exchanges are guided by the price of Bitfinex.

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

It's a classic movement that some traders do, especially the whales, but if so, it smells really good, we could see a beautiful bullish rebound, maybe that's what it takes to cheer up this Christmas.

[pooya87]

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

the answer is obviously yes it will affect the entire market negatively.

but the less obvious part is the reason for it. the reason has nothing to do with relationship between tether and bitcoin, despite what most FUDs want you to believe. the only reason would be the fact that many big exchanges such as bitfinex itself rely heavily on tether and a lot of traders are already lulled into a false sense of security while using this centralized altcoin. its downfall (which in my opinion is inevitable) will cause panic and that panic will be the reason for price drops.
additionally i think altcoins will take the biggest hit from this since for example if 1 out of 10 bitcoin exchanges has tether, 9 out of 10 altcoin exchanges have ONLY tether and nothing else.

[adaseb]

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

Ofc it will not be good.
Tether is a tool to buy and trade bitcoin and other cryptocurrencies.
THere are other stable coins already, which is good. As the whole cryptocurrency ecosystem doesn't rely only on tether.

However, if tether breaks and it turns out to be not backed up by USD, a lot of fear will dominate the market and bitcoin price will fall down in the short term.

But in long term it doesn't affect the whole scheme of things

We already know that Tether actually is backed by USD since it turned out they were only backed by 66% of reserves, hence the reason for the LEO launch. The 33% or so was basically frozen by some banks due to the Crypto Capital scandals, and since it was frozen there is a good chance they will recover it.

I think this tether mess is way over blown, every few months or so there is some tether fud. And yet many exchanges like Binance or Kraken have large volumes in tether related transactions. Looking at the USDT/USD rate its still pegged to 1:1, so most investors aren't worried.

[NeuroticFish]

Imho it would be good. At least on long term.
Imho USDT, being not truly backed by anything, is the key of the Bitcoin price manipulation.
And trading will not die off because USDT will be gone, no. There are other stable coins, properly backed and audited, ready to take the place.

[figmentofmyass]

Of course it will be good short term as all the usdt will flee and guess where its going to go?

there are 2 scenarios.

1. there's regulatory actions, bank account freezes/seizures, insolvency---but tether and bitfinex remain operational and able to meet day-to-day liquidity requirements

2. the FBI and USAO come after tether and bitfinex---domains and servers seized, personnel arrested, banks continuing to work with them become criminal accessories, etc

scenario #1 is what we've already seen for years. it's the classic "tether FUD". people panic buy bitcoin/altcoins to get out of tether, which drives market prices upwards.

we've never seen scenario #2. i reckon if that happened, all USDT markets would quickly fall to $0 and it would have severely negative effects on the entire crypto market. not only would bitfinex and tether customers be crushed, but so would USDT holders at binance, bittrex, poloniex, okex, and other major exchanges, OTC traders......it would be ugly. a lot of capital would go up in smoke. it would be a much bigger, uglier version of the mt gox collapse.

[Person610]

Now the question is, if Tether ever go down Will it affect the price of Bitcoin and the whole crypto ecosystem?

Ofc it will not be good.
Tether is a tool to buy and trade bitcoin and other cryptocurrencies.
THere are other stable coins already, which is good. As the whole cryptocurrency ecosystem doesn't rely only on tether.

However, if tether breaks and it turns out to be not backed up by USD, a lot of fear will dominate the market and bitcoin price will fall down in the short term.

But in long term it doesn't affect the whole scheme of things

We already know that Tether actually is backed by USD since it turned out they were only backed by 66% of reserves, hence the reason for the LEO launch. The 33% or so was basically frozen by some banks due to the Crypto Capital scandals, and since it was frozen there is a good chance they will recover it.

I think this tether mess is way over blown, every few months or so there is some tether fud. And yet many exchanges like Binance or Kraken have large volumes in tether related transactions. Looking at the USDT/USD rate its still pegged to 1:1, so most investors aren't worried.

That’s what the law enforcers are going to check if the tether is actually backed by 100% usd or they just like to keep printing more like a normal govt

[exstasie]

We already know that Tether actually is backed by USD since it turned out they were only backed by 66% of reserves, hence the reason for the LEO launch. The 33% or so was basically frozen by some banks due to the Crypto Capital scandals, and since it was frozen there is a good chance they will recover it.

They were backed 74% by cash at the time. The LEO offering made them solvent, right?

I think it's doubtful they'll recover the money. It was in the custody of unlicensed money transmitters and commingled with Colombian drug cartel money. I'm not sure how Polish jurisdiction works (I think that's where most of the funds were seized) but in the US I feel like the police would just take it using civil asset forfeiture.

I think this tether mess is way over blown, every few months or so there is some tether fud. And yet many exchanges like Binance or Kraken have large volumes in tether related transactions. Looking at the USDT/USD rate its still pegged to 1:1, so most investors aren't worried.

Yep, but things could change quickly if (for example) the US government seized some more bank accounts and withdrawals stopped flowing.

[Lucius]

The whole situation around USDT for me personally is very non-transparent and pretty much in some gray area. Someone tells you that something is backed by USD, then it is not fully backed, but it is not known with what is backed 26% of USDT... I find stable coins useful in some situations, but there must be strict controls so anyone can not print as much as they want and to claim that everything is backed by fiat.

figmentofmyass scenario 2 really looks pretty ugly, and I hope it never happens because the USDT has really become something most take for granted without thinking about the risks it carries with it.

[panganib999]

Well, based on the article it just pretty much said about how the lawsuit is filled with accusations, and accusations only. Assuming it is true, and Tether goes down, I doubt it could impact Bitcoin price in the long run. Sure, FUD may happen/occur when Tether goes down, but BTC price shouldn't generally be affected by it. Unlike the past, Tether isn't really the only stable coin available out there, and I really doubt stable coins could impact BTC price that much.

[exstasie]

The whole situation around USDT for me personally is very non-transparent and pretty much in some gray area. Someone tells you that something is backed by USD, then it is not fully backed, but it is not known with what is backed 26% of USDT...

Before the NYAG exposed the whole thing, Tether had changed their terms to this: 

“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

In hindsight they were stating pretty clearly that USDT wasn't full backed by cash anymore, that "from time to time" its reserves would include loan receivables.

https://cointelegraph.com/news/cryptocurrency-community-eyes-tether-after-website-dilutes-usd-backing-claims

[Person610]

Tether is basically a token backed by your own money.
It’s a a contract like any other, but people buy it for a dollar, with some fees for the tx, it’s basically your own money that backs it. The biggest thing question is will they use people funds to cover there losses if there is any

[Wexnident]

I doubt not? Tether isn't even 100% backed by USD, and even if it was, there are a lot of other stable coins out there that could replace it. In the short run, market price may scuffle a bit because of tether going down, but it isn't a damage that can't be repaired by time. Rather, a few months should be enough for traders to adjust to the disappearance of tether and move on and about with their trades just as usual.

If however a lot of changes occur, damages may remain in the long term. Tether going down joined up with several famous coins suddenly having issues and the like.

[Dart18]

It will affect it a lot.
There is a positive side and also a negative.
It depends on how it will be done.
Take out Tether with a warning first then people will be buying bitcoin and altcoin which will cause a lot of demand.
Now, without a warning and all those money will be taken out with it. I think you know what will happen.

I do think it is not the right time anymore. We are far too late to take out that huge market that is keeping the traders alive.  

[Hueristic]

The whole situation around USDT for me personally is very non-transparent and pretty much in some gray area. Someone tells you that something is backed by USD, then it is not fully backed, but it is not known with what is backed 26% of USDT...

Before the NYAG exposed the whole thing, Tether had changed their terms to this: 

“Every tether is always 100% backed by our reserves, which include traditional currency and cash equivalents and, from time to time, may include other assets and receivables from loans made by Tether to third parties, which may include affiliated entities.”

In hindsight they were stating pretty clearly that USDT wasn't full backed by cash anymore, that "from time to time" its reserves would include loan receivables.

https://cointelegraph.com/news/cryptocurrency-community-eyes-tether-after-website-dilutes-usd-backing-claims

When it first came out they had a disclaimer that they would not be held responsible to redeem tether for currency.

I have no clue why people trusted it and it managed to last this long.
People will do anything for convenience and then they cry afterwards for the Nanny state to save them.

[magneto]

Will it be good? I highly doubt that given the influence that USDT currently has over the market.

However, I think that the detrimental effects that tether going down will have on the wider crypto market is overstated to an extreme degree at this point, because of the fact that USDT simply will not be the fundamentals underlying BTC's growth in the long run.

Perhaps short term we'll see a negative external shock, but in the long run, it barely matters.

[exstasie]

I have no clue why people trusted it and it managed to last this long.
People will do anything for convenience and then they cry afterwards for the Nanny state to save them.

They trust it because it's lasted so long. Tether dodges every bullet. After 5 years, betting on them going down almost starts to feel like betting against Bitcoin.

The resilience of the dollar peg also shows that Tether redemptions are consistently flowing. If people panic sell their USDT, arbitrage traders who can redeem USDT just drive the market back towards $1. As a result, this stability gives confidence to the market. After all, as long as USDT stays pegged to $1 no one is losing value.