Yeah this is all being driven by tether collapsing which is driving up prices on bitfinex and people trying to arbitrage the price difference before bitfinex goes bankrupt. They’re also printing tether like crazy again.
Edit: The initial downvotes didn't don't convince me that the pro-Bitcoin et al holders aren't part of a Pyramid-Ponzi scheme, however they were certainly expected to happen in this thread.
If you're not familiar with indoctrination - which is belief guided by others with similar bias and blind spots - even Fred Wilson, USV partner - USV who's early investor in Coinbase (etc) acknowledged the problem of ideologies/orthodoxy (yet blind to it himself it seems): https://avc.com/2019/04/orthodoxy/ -- Bitcoin/cryptocurrencies is religion with members tied together with a financial incentive.
Source: Work in the space every day at an algo/automated prop trading and market making firm.
- People want to exit their position in USDT.
- It is easier/faster for them to exit to Bitcoin than to USD (because of their banking situation or KYC issues.)
- This increases the demand for Bitcoin and drives the price up.
If it was true that there were problems with Tether; there would be a run on the bank.
And there would be a point where people were blocked from getting real USD for Tethers.
But if I buy 100 USD worth of Tether; then can I go to Tether the company (or something) and exchange it to real USD which would be transferred to my USD bank account?
Does it work that way?
If not then how does Tether maintain the price of one USD to one USDT?
If the average person with a few thousand dollars of Tether wants to get out, they need to first get that value to an exchange that supports real US Dollars. In order to do that, they likely have to do an intermediate sell to some other widely held and accepted coin or token (Bitcoin, Ethereum, XRP), since most exchanges that seem to deal with Tether do not deal with USD, and vise versa.
If there were a run on Tether in particular, one of the effects you might expect to see is prices of the most widely traded coins going up in price on crypto-dominant exchanges, and the price of those same coins going down in exchanges with free (as in low friction) convertibility to cash withdrawals. This particular effect would only be one of many though, so the signal might not even be noticeable above the noise of the markets. You can imagine that Tether being proved to be insolvent or a fraud in enough people's eyes (and also close enough to insolvency to spread panic: fractional reserves with illiquid holdings [at best], insolvencies, and outright Ponzi schemes [at worst] can last far longer than you might expect), would cause a lot of other additional, and probably larger, market movement.
This isn’t necessarily true. Tether could use their reserves to buy up the demand and keep the price stable, all the way up until they run out of reserves (I think it’s uncontroversial that they are not 1:1 backed by USD now, right?)