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Comment by antonvs | Hacker News Reader

> How does it explain that Tether is printing more and more Tethers?

The demand for Tethers is high because the demand to be able to trade is high.

> Do you think more and more people are selling BTC for USDT for a "short term"?

More and more people have been getting involved in trading as the price of Bitcoin and other cryptos was spiking. Now those people are in the market, but Bitcoin has been dropping. It makes sense that a lot of them would want to hold a USD proxy under these circumstances.

Of course, that's the optimistic scenario. It's also possible that There's are being used fraudulently to pump BTC. Without proper transparency, it's impossible to be sure.

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> It's also possible that There's are being used fraudulently to pump BTC.

My point is: How can you pump BTC with USDT? You need somebody to buy your USDT if you want to sell USDT. In fact, you need somebody to buy an enormous amout of USDT if you want to pump BTC.

Pumping BTC is not a one sided thing, and I fail to understand the other side. What I get from this thread is that that nobody really knows who is buying the 100 million USDT per week.

> How can you pump BTC with USDT?

Get people to believe it's backed 1:1 by USD when it's not, so that it is viewed as equivalent to USD but less problematic in regulatory terms, and then print a bunch of unbacked USDT and use them to buy BTC. To the market, the effect is as if a whole lot more actual USD were chasing BTC, effectively looking like higher demand.

I'm not sure how effective that would be in practice. Total Tether issued as of the end of 2017 was about 1.3 billion. Coinbase booked over $1 billion in revenue in 2017; the amount of money going into them was presumably much bigger than that. (There's also weak evidence from price differences etc between exchanges that the bulk of the demand has been coming from Coinbase/GDAX.)

> Total Tether issued as of the end of 2017.

Total Tether issued as of the end of January 2018 is about 2.3 billion.

The all-time-high was December, so anything issued after that didn't help in reaching it.

> and then print a bunch of unbacked USDT and use them to buy BTC.

But who is buying and HOLDING the USDT? Sorry that I repeat myself but this is the whole point I want to understand.

Yes, somebody is selling USDT for BTC, I get that. It is nice but I want to understand the other side. Who is buying USDT for BTC? Why? Somewhere there is a billion of USDT lying around. Somebody bought it. Somebody is keeping it. WHY is somebody keeping it? Why is somebody buying more and more of it?

I think it is a very crucial point to understand. Yes, maybe you can convice some fools to sell their BTC for USDT. But they will notice, because there is nothing that you can do with USDT except buying BTC. So they will BTC again and try to cash out somewhere else. So who is holding the one billion of USDT?

The people buying USDT are people trading cryptocurrency. There are many exchanges (probably most) that don't deal with USD, so USDT or other Tether varieties are the only way to execute trades that approximate trading fiat currencies for pure cryptocurrencies.

I think you may not realize how large the market has become. The top 6 biggest exchanges are currently trading more than $10 billion worth of cryptocurrencies daily, and there are many more that trade $100s of millions daily.

If that volume is sustained (it reached a peak recently with the price spike), it would put the annual trading volume well into the trillions, perhaps around $5 trillion.

100 million USDT per week seems pretty reasonable (if not small) to support that kind of activity.

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