IF USDT would collapse what do you think will happen to the BTC price?

[Silberman]

Hey Guys

New here but not in the Space.

What's always annoying me about the whole Tether discussion is the fact that everybody that talks about the topic mostly assumes that if usdt collapses (not saying that it will) bitcoin would dump harder than ever before. While I can see that a lot of volume is through tether ( I would say its the majority) the collapse would by no mean be a small event. If you look back tho to end of 2018 when the whole Crypto Capital saga took place and usdt "dumped" into the .80s the only thing that really happened was that btc immediately spiked by a good amount simply because if you price btc/usdt if one collapses the other rises. So let's just assume that the day when tether would collapse actually comes and it's not just a few days of uncertainty. What side would win. A) everybody just want's to flee usdt (into btc) or B) everybody want's to flee crypto as a whole (through btc into "real usd" / coinbase)

I think a dump will happen but mostly because people will panic, there will be some that will try to exchange their USDT for bitcoin increasing the demand but a great deal of people, weak hands obviously, will begin to sell, whales will see an opportunity and crash the price thinking on all the cheap bitcoin they will get, but then we will see a quick recovery as those investors simple move out to other stable coins or decide to hold the bitcoin they have, so while it will be a traumatic experience for the market the instability will only last a few weeks and then we will need just a few months to recover and the price will go back where it was before all of that happened.

[MCobian]

My opinion that if USDT collapses it will certainly affect all coins, including the Bitcoin price there is a possibility of being dumped.
Because nowadays many people trade crypto on exchanges using USDT pairing, moreover, the amount of USDT volume is still the highest.
So USDT collapse will panic investors, this is what might cause Bitcoin price to dump. If this happens I am sure it will not last long,
because Bitcoin always recover quickly.

[bryant.coleman]

bryant.coleman, 1 USDT should be backed with $1, and at one point it was publicly revealed that as much as 30% of the USDT on the market were not backed with $, but with some other things. If someone powerful (and that's only the US) wanted to go all the way and investigate the whole thing thoroughly, they'd probably find enough reason to shut down the whole thing.

At that point, anyone in possession of the USDT would actually have one big nothing, and that would really be very bad news that would definitely hit Bitcoin. To the average viewer looking at it from the side, it would sound like this: "Coins worth $20 billion printed from nothing, is Bitcoin also fake?"

Dealing with stablecoins is far more dangerous than with fiat -> Most Stablecoins Can Be Frozen, Even in Your Own Wallets

Completely agree with your post. Stablecoins such as USDT goes against the very principle of cryptocurrency. The biggest advantage with Bitcoin is that you will be able to store money on your own. This is not applicable to stablecoins, because the exchanges are storing the money and they are issuing a token to you to represent its value. And as you have pointed out, many of these exchanges reject independent audit and therefore we don't know whether these stablecoins are backed up 1 to 1 or not.

If any of the larger Stablecoins go down, it can have a very bad impact on the exchange rates and adoption of Bitcoin. It is unfair, as Bitcoin has nothing to do with these stablecoins. 

[nrvasquez]

My opinion that if USDT collapses it will certainly affect all coins, including the Bitcoin price there is a possibility of being dumped.
Because nowadays many people trade crypto on exchanges using USDT pairing, moreover, the amount of USDT volume is still the highest.
So USDT collapse will panic investors, this is what might cause Bitcoin price to dump. If this happens I am sure it will not last long,
because Bitcoin always recover quickly.

To be honest, it's hard to imagine this will happen, because the foundation of the stablecoin itself is backed up with the original value of USD. maybe there will also be regulations governing stablecoins in 2021, but imagining a USDT colapse is almost inconceivable, and might lead to a massive decline in trust in crypto.

[Sithara007]

To be honest, it's hard to imagine this will happen, because the foundation of the stablecoin itself is backed up with the original value of USD. maybe there will also be regulations governing stablecoins in 2021, but imagining a USDT colapse is almost inconceivable, and might lead to a massive decline in trust in crypto.

USDT was very close to a collapse in 2019, when the New York Attorney General (NYAG) launched an enquiry directed at a cover-up that involved $850 million loss at Crypto Capital. It was later proved that reserve funds from Tether (USDT) were used to cover the shortfall, which resulted from these losses. In the mainstream market, this would have resulted in the complete destruction of the asset. But on the other hand, Tether actually managed to increase its market cap from $4 billion in 2019, to $20 billion as of now, and the incident had hardly any impact on the Bitcoin exchange rates.

[Leviathan.007]

It is possible for USDT to collapse. Because the the team wasn't honest enough about the liquidity and there was a collapse back in 2018, so that's possible to see USDT at 0.8 again. USDT is an important stablecoin, I guess because of the panic in the market after collapsing the USDT the market would fall a little bit because the crypto market is all linked together, but in the other hand, bitcoin showed us it can be stay stable even if whole collapses. So, I guess Bitcoin will stay stable after falling for a little bit.

[PonZZ]

If Tether would crash, people started to move from USDT to another assets, so it pushed Bitcoin.

[Psynthax]

Probably bearish market for temporary because people gonna lose trust to stablecoin asset if its really happening. But, worst case scenario people just gonna move their money to real crypto like bitcoin or eth.
My best case scenario is people just move on to other stablecoin since theres plenty already and probably gonna try out crypto released by the government. i think usdt collapsing seems possible because it's private owned and everything  could happen to this kind of company.

[ice18]

It will possibly affect the whole crypto market for a short term there are alternatives and most users will move from usdt to other stablecoins like USDC or BUSD but the negativity it will bring to crypto market will impact the price of bitcoin and other crypto so Im hoping that this will not happen. 

[Lucius]

If any of the larger Stablecoins go down, it can have a very bad impact on the exchange rates and adoption of Bitcoin. It is unfair, as Bitcoin has nothing to do with these stablecoins. 

Unfortunately most crypto traders are not even aware of what stablecoin is, and how easy it is to manipulate the way it is created with almost no serious oversight. Their max supply is actually unlimited, just as fiat is unlimited, and thus they share its destiny. People and human greed will always find a way to spoil even the best solution that someone offers them - but that only shows that the human mindset is not yet ready for the degree of financial independence offered by Bitcoin.

[fiulpro]

It will ofcourse have a negative impact but at the same time: "not long lasting"
People who want to engage in BTC would do that through other methods, they will soon find replacement, at the same time we do have a lot of options now one can just find out which one works for them.
I won't be surprised if tether crashed at this time because if I remember correctly, it's not just backed by usd but also the loans from companies etc.. therefore during the pandemic there might be higher chances of it happening.

Explore your options, it is not the only pair.

Plus I do believe that if tether decreased in price drastically people would need some sort of investment to hold onto, btc would be ideal now so thus in few days it would balance the crash out.

[magneto]

Hey Guys

New here but not in the Space.

What's always annoying me about the whole Tether discussion is the fact that everybody that talks about the topic mostly assumes that if usdt collapses (not saying that it will) bitcoin would dump harder than ever before. While I can see that a lot of volume is through tether ( I would say its the majority) the collapse would by no mean be a small event. If you look back tho to end of 2018 when the whole Crypto Capital saga took place and usdt "dumped" into the .80s the only thing that really happened was that btc immediately spiked by a good amount simply because if you price btc/usdt if one collapses the other rises. So let's just assume that the day when tether would collapse actually comes and it's not just a few days of uncertainty. What side would win. A) everybody just want's to flee usdt (into btc) or B) everybody want's to flee crypto as a whole (through btc into "real usd" / coinbase)

No matter which way you look at it, there will be a short term dump for sure.

Tether is an extremely important source of liquidity for bitcoin markets and there is absolutely no doubt that there will be a negative demand shock if USDT goes under. There will also be secondary effects in terms of investor psychology that may not necessarily be backed by solid reasoning (but hey, markets are irrational at the best of times).

But in the long run, I think that BTC has shown enough for us to say that it is immune and independent of any external movement. It is indeed a long term store of value. We've seen a bunch of countries, including China, who have vigorously opposed BTC. The same effects occurred - short run dump due to irrational markets, long run rally due to underlying fundamentals and peoples' realisation that they are unchanged no matter what the legislations are.

[Vishnu.Reang]

Unfortunately most crypto traders are not even aware of what stablecoin is, and how easy it is to manipulate the way it is created with almost no serious oversight. Their max supply is actually unlimited, just as fiat is unlimited, and thus they share its destiny. People and human greed will always find a way to spoil even the best solution that someone offers them - but that only shows that the human mindset is not yet ready for the degree of financial independence offered by Bitcoin.

I would never use a stablecoin, unless trading between cryptocurrency and fiat is banned in my country. Here, that is not the case and therefore I have never owned USDT or any other stablecoin. But the situation is different in some of the countries such as China. Direct trading between fiat and crypto is banned and therefore the users are forced to use stablecoins. But nowadays, a lot of the traders even in countries with no restriction in trading are also using stablecoins and this actually surprises me. IMO, stablecoins are like ticking timebomb. No one knows when they will go down.

[Lucius]

Vishnu.Reang, it is clear why most are in favor of using stablecoins, in addition to those who are literally forced to do that because it is their only way to crypto trading, to those who just want as fast transactions as possible when it comes to bypassing banks and fiat transactions. Such transactions can sometimes last for several days, which is really something that can be frustrating, and this is certainly not the case with stablecoins.

The problem is that their creation is not transparent and can be abused, and of course at any time they can be completely frozen and become completely worthless. I hope that this will not happen, and that people will eventually become more cautious in dealing with any stablecoins.

[Silberman]

Vishnu.Reang, it is clear why most are in favor of using stablecoins, in addition to those who are literally forced to do that because it is their only way to crypto trading, to those who just want as fast transactions as possible when it comes to bypassing banks and fiat transactions. Such transactions can sometimes last for several days, which is really something that can be frustrating, and this is certainly not the case with stablecoins.

The problem is that their creation is not transparent and can be abused, and of course at any time they can be completely frozen and become completely worthless. I hope that this will not happen, and that people will eventually become more cautious in dealing with any stablecoins.

Which is why it is difficult to understand the posture of banks, one of the main reasons people use stable coins is because it is easy to get in and out of the market with them and it allows you to protect yourself in the case of a crash, if banks were faster in the way they operate and they did not put as many roadblocks for people using cryptocurrencies then all of that business could have gone to them but instead exchanges were smarter and kept that business for themselves.

[HaXX0R1337]

If USDT collapse then we would see a major disruption in the market and we might even seen a major correction as the confidence of the investors will be affected if there is a situation like that and we might see institutional institutions booking their profit if there is a negative news like this magnitude. That does not mean that the entire bitcoin price will be affected but the entire market but bitcoin will rise again eventually.

[Maxre]

If the value of USDT collapses, I don't think it will affect Bitcoin which can stand alone, maybe there will be other alternatives such as stable coins that have been circulating a lot today to replace USDT, and this momentum can be used to gain the trust of users.

[Wingsbtc]

This is just a guess honestly, even if USDT goes down it will affect the whole crypto market for a while and bitcoin will get back on its feet, bitcoin is more than capable to handle any bad situations, we have seen how strong bitcoin is and it has died a thousand death before and still come back alive

[stompix]

It's all guesswork.  I'm sure there would be some volatility, but it's hard to tell which direction it would go.  It might also depend how abrupt the collapse is.

If Bitfinex and Tether go completely dark, the FBI takes down their domains, large exchanges like Binance freeze USDT markets, etc. then things could play out very differently.

I would say it's a bit more important what would trigger the collapse rather than how fast it will go.
If it's bitfinex deciding to close down and allow users to redeem all USDT (lol, like that would ever happen) it might not be that bad as if the FBI taking them down and freezing their whole business. That would hurt so much short term the March drop will look like a walk in the park.

But I think the biggest loser will not be BTC, there are hundreds of shitcoins who have no other trading pair, those are doomed, just as exchanges that deal with stable coins avoiding fiat because of regulations. They will have to switch to a different stable coin and hope users will somehow be convinced to use this one after losing billions with tether. And thinking of this, the collapse doesn't seem that bad anymore

If Tether would crash, people started to move from USDT to another assets, so it pushed Bitcoin.

When you lose all your savings with one business you start a different business, right? With what money???!!!!!

[jubalix]

Tether was so FUD years ago I thought It was going collapse.


I think it has collapsed, just no one noticed or can prove it.

I am pretty sure it's fractional.


Now there are plenty of other USD coins to take over, but honestly, until they have a transparent real-time issuance and burn mech it not trustworthy.

I guess this kind different point but the USD is collapsing faster so even if tether fails, sure short term there will be issues but another better solution will arise and BTC will continue.