Hacker News Reader

Comment by amznthrwaway | Hacker News Reader

Tether is largely used to run pump scams on BTC. It's other uses are marginal at best.

It is common for Coiners to remain willfully ignorant about the price manipulation, because y'all don't want to admit how small, fragile, and wildly corrupt your ecosystem is.

View on HN

I'm just not clear on how Tether usage specifically increases the bitcoin price. My understanding is it's used to transfer money between exchanges, and possibly to fund ICO's. Neither of those really lead to an increased bitcoin price.

It goes something like this:

1. Tether was announced as a "USD equivalent" - i.e. 1 tether == 1 USD which would be deposited somewhere in a bank accouont

2. Billions of dollars worth of tether were created with no USD backing, injecting fake value into the system

3 These tethers were used to buy BTC, thereby giving an artificial value to BTC since it was assumed thes BTC/Tether transactions could be treated as BTC/USD transactions.

Essentially a lot of fake demand was created for BTC, thereby inflating the price massively, and luring retail investors to spend real money for BTC since they saw it as a rapidly appreciating asset.

That makes sense, but is there evidence this is actually happening?

I think for this chain of logic to be true, there would have to be cases of people attempting to convert Tether into USD, and failing. That did happen with Mt Gox, so it’s certainly possible.

There is a credible study[0] on the subject.

But your condition does not have to hold for this manipulation to work. Assuming Bitfinex made billions of real dollars in this scheme, they could easily cover the liquidity of cashing out anyone who wants to exchange Tether for USD.

[0]: https://www.wsj.com/articles/large-bitcoin-player-manipulate...

Interesting. If the study is indeed correct, and half the previous run-up to ~$20k was due to Tether, then the market has since correct as the price is a little below half that value. Of course there have been a lot of ups/downs since then, with bitcoin hitting as low as $5k recently.

I mean, the fact that the price of this asset has been heavily manipulated in the past and the price has since come down a bit would not be evidence that there is not still manipulation happening, or that the price has reached it's "fair market value"

Reply on news.ycombinator.com