Tether and circle burning stables, why not buy bitcoin instead?

[Fivestar4everMVP]

Well, I am just curious, in the past 7 days, tether (the issuer of USDT stable coin) and circle (the issuer of USDC stable coin) has collectively burned approximately $2.1 billions dollars in stables, this amount of money could have easily afforded or bought around BTC35,300 bitcoins.

This news can be true but maybe classified, I've tried searching the Web for the burn tx but found non, but instead, I found out that tether and circle do carry out such burn periodically for whatever their reason is..

I am simply curious to know what the bitcoin community on this forum thinks about this..(let's assume this is all true), my question is..

• Wouldn't it be a great idea if they spent those periodic burns on buying and holding bitcoin instead?
• Does not carrying out those periodic burns has any significant economic impacts or effects on crypto? Like the risk of stable coin inflation that could lead to depegging from the US dollars?

[_act_]

Wouldn't it be a great idea if they spent those periodic burns on buying and holding bitcoin instead?

Does not carrying out those periodic burns has any significant economic impacts or effects on crypto? Like the risk of stable coin inflation that could lead to depegging from the US dollars?

They burned the stable coins and redeem it in fiat so that USDT from Tether and USDC from Circle will not depeg but maintain its equivalent price with the United States dollar.

This supposed to be moved to altcoins discussion because it is about stable coins which are not bitcoin but altcoins.

[notocactus]

Well, I am just curious, in the past 7 days, tether (the issuer of USDT stable coin) and circle (the issuer of USDC stable coin) has collectively burned approximately $2.1 billions dollars in stables, this amount of money could have easily afforded or bought around BTC35,300 bitcoins.

This news can be true but maybe classified, I've tried searching the Web for the burn tx but found non, but instead, I found out that tether and circle do carry out such burn periodically for whatever their reason is..

It can be legal issues like their stablecoins were not truly peg 1:1 like they said, but who knows.

Years ago I was very skeptical about their claims of 1:1 peg for their stablecoins especially with their stablecoin mint rate. This is still with me now but honestly recent years, Tether and Circle actually engaged more in the USA bond market and traditional finance in the nation, so it's sort of foundation for their companies and stablecoins.

Collapse of Tether will bring issues to not only Tether USD, the cryptocurrency market but likely the USA government too, so I am optimistic that Tether and Circle will be well.

Even so, it does not mean that I recommend people to store their money in stablecoins.
They can choose between bitcoin and fiat currencies, or choose both, but stablecoins for money storage in long term is not my advice.
PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets.

[Chibit01]

They burned the stable coins and redeem it in fiat so that USDT from Tether and USDC from Circle will not depeg but maintain its equivalent price with the United States dollar.

This supposed to be moved to altcoins discussion because it is about stable coins which are not bitcoin but altcoins.

This is is their burning that's supposed to be excessive removal of USD which has been redeemed, and when there is also too much demand for USDT, they print more and add to circulation. How does that work?

And all the frozen USD which is above $4b do they also burn it, or convert it into personal use, since it won't be returned to the owners?

[Nathrixxx]

We don't need to experience this before bitcoin network can be stable or profitable as well, coin burning is only common to altcoins and not in Bitcoin network, the only similar experience in this manner is when you lost your bitcoin and this is assumed to be spread across other bitcoin holders value as your contribution to the network, bitcoin has everything it takes to maintain ever increasing in value because of its acceptance and network, knowing about it profitability will also make it more volatile for people to find an entry and exit point in buying and selling Bitcoin.

[o48o]

Well, I am just curious, in the past 7 days, tether (the issuer of USDT stable coin) and circle (the issuer of USDC stable coin) has collectively burned approximately $2.1 billions dollars in stables, this amount of money could have easily afforded or bought around BTC35,300 bitcoins.

This news can be true but maybe classified, I've tried searching the Web for the burn tx but found non, but instead, I found out that tether and circle do carry out such burn periodically for whatever their reason is..

I am simply curious to know what the bitcoin community on this forum thinks about this..(let's assume this is all true), my question is..

• Wouldn't it be a great idea if they spent those periodic burns on buying and holding bitcoin instead?
• Does not carrying out those periodic burns has any significant economic impacts or effects on crypto? Like the risk of stable coin inflation that could lead to depegging from the US dollars?

So, tiny bit less marketcap for USDT and less USDT out there. Buying BTC with it wouldn't serve the same purpose, as same amount of USDT would still exist.

You might as well ask what's the reason for then to issue more USDT periodically. Maybe they need more fiat money, or are issuing that same USDT it in somewhere else, in a different form or a different chain. Maybe they are trying to match their amount of USDT with right amount of reserves required by MiCA regulations. Who knows. What ever the reason is, this has no effect to rest of the cryptocurrencies.

[Fivestar4everMVP]

~snip

~snip

Even so, it does not mean that I recommend people to store their money in stablecoins.
They can choose between bitcoin and fiat currencies, or choose both, but stablecoins for money storage in long term is not my advice.
PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets.

You are right, I've come across some people who hold stables and still claim to be invested in crypto, and I wonder how holding stables translates to thing an investment even if its staked

I believe stables were developed for the sake of traders who would really something to hold when ever bitcoin becomes very unstable and uncomfortable to hold.. For me, only time I hold stables is when bitcoin goes into a dangerous volatility mode like in extreme bear season, and this is simply to wait for the price of bitcoin to fall to a certain (target price) so I can buy in.

Now back to the discussion, ive read every comment so far and I still say, what if they stop the burning and simply invest that money in bitcoin, I believe it will greatly help the market, money burnt is useless right? Why not buy bitcoin with it and maybe hold it forever, since they are always going to print more stables when demand rises?

[rat03gopoh]

Tether’s delisting in the EU raises broader concerns for stablecoin flows and crypto risk appetite into Q3.
~
Meanwhile, on the technical front, USDT continues to trend lower, with $3 billion in outflows since peaking near $190 billion earlier in the Q2 cycle.

https://ambcrypto.com/is-tethers-mica-setback-creating-a-bearish-q3-setup-for-crypto/

I don't know about "outflows," but that could also mean burning.
It means they're actually reducing supply because global market demand is potentially declining until Tether is willing to change its stance to be more lenient with MiCA regulatory changes.

[PostQuantumBTC]

You are right, I've come across some people who hold stables and still claim to be invested in crypto, and I wonder how holding stables translates to thing an investment even if its staked

I believe stables were developed for the sake of traders who would really something to hold when ever bitcoin becomes very unstable and uncomfortable to hold.. For me, only time I hold stables is when bitcoin goes into a dangerous volatility mode like in extreme bear season, and this is simply to wait for the price of bitcoin to fall to a certain (target price) so I can buy in.

Yes, holding stable coins is not an investment, it is very possible that the people you are talking about are from countries that have high inflation rate like Venezuela and turkey. People from countries with low inflation rate having strong currencies like Kuwaiti dina will not say something like that.

There could be a way the exchanges can have dollar, euro and other fiat, you can see them as pairs on the exchanges now which should let us know that stable coins are not necessary. Stable coins are created also for developers to make money from it.

[d5000]

Wouldn't it be a great idea if they spent those periodic burns on buying and holding bitcoin instead?

No, because this is not real "money", it's only numbers.

They have full control over their supply, so they can create coins out of thin air. As long as it sits idle and they don't put it into circulation, this is only a number in their database (only that it can be seen publicly because it's on a blockchain). But as long as they offer it on the market, they need it to be backed with assets, and demand has to exist for it.

So these burns only indicate that there is less demand for the stablecoin. And if they burn it, they need less assets to back it, which is better for their efficiency.

Buying Bitcoin instead would mean that they put it into circulation. This means they have to back it. And the stablecoins don't disappear when they buy BTC: they change ownership. In the case of USDT for example this has the effect that the USDT side of the USDT/BTC order book becomes thicker. A single BTC buy would not have a big effect, but in the long run, that would lead to a lower price for the stablecoin (measured in BTC) and thus increase the danger of a de-peg.

They thus could do this only if there is a demand surplus coming from BTC, i.e. many Bitcoiners trying to sell their BTC for the stablecoin.

Does not carrying out those periodic burns has any significant economic impacts or effects on crypto? Like the risk of stable coin inflation that could lead to depegging from the US dollars?

It's exactly the other way around: if they didn't burn and instead retain stablecoins in circulation which have no demand, then this could have a negative effect and even a depeg risk in the long term, as explained above.

Said simply: these stablecoins are not "needed" at that time. So they can burn them and liberate assets they hold to back them.

There could be a psychologic effect if for example USDT was burning and USDC was not: this could indicate there's less demand for USDT than for USDC and create fear among USDT holders. But that difference, I assume, has to be enormous to really put the USDT peg in danger.

[asriloni]

The stable issuer burn its coin doesn't always mean they're burning it. There are some reasons why they do it.

1. Redemption, entity cv stablecoin to fiat
2. The down in the backing, the down in the asset used to back stable coin forced issuer to burn it to retain stable coin to always 1:1
3. Crosschain tx, sending stablecoin to the different blockchain for liquidity purpose.

I also remind you tether owned around 5% of BTC in their porto to back its stable coin. So i don't think you need to tell them to buy bitcoin.