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Comment by howlgarnish | Hacker News Reader

Here's an interesting graph comparing the price of Bitcoin (red), the market cap of Tether (blue) and Google Search interest in Bitcoin (green):

https://imgur.com/zxFmFUs

During the 2018 spike, there was a massive surge in interest in Bitcoin, which has been notably absent this year. However, since COVID hit the issuance of stablecoin Tether has been through the roof, going from $4B to $18B and counting printed.

Each Tether is supposed to represent $1 added to the crypto ecosystem. So here's the big question: if there's not much retail interest this time, where did that $14B come from? Or is it more likely that it didn't, and the Tether being used to buy BTC at ever-higher valuations isn't backed by anything?

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We know tether has neither the bank account nor the backing money, as the NYAG lawsuit tells us. Tether doesn’t even have a banking relationship let alone a mattress big enough to hide eighteen billion dollars under lol

This is the classic emperor has no clothes situation. Nobody in crypto wants to expose them because the value of their own holdings will plummet to zero. And at $18B they’re basically too big to fail. As much as people pretend otherwise Tether and Bitfinex is defining the price of crypto, everything else is a rounding error.

I believe this is the latest update on the suit. [1]

[1] https://www.coindesk.com/nyag-bfx-letter-hearing

ok, for anyone throwing this dated argument about USDT..

Have a look at a sound USDC then - market cap $450mil in march --> $3bil now. Same underlying story.

So enlighten us: where is that $14 billion and counting coming from?

They dropped the claim of being backed by cash and now openly admit it on their website that they are backed by "other assets", which is probably mostly bitcoin they buy with all that fake money they print, which in turn raises the price of bitcoin so their "reserves" go up on paper.

>Nobody in crypto wants to expose them because the value of their own holdings will plummet to zero

Gotta give it to them it's a pretty smart scheme. Print money out thin air and co-opt the whole crypto community to not question it as it'd crash everything.

I do wonder how much longer that can continue.

It’s very smart! I have a lot of respect for the hustle haha. The movie is gonna be amazing.

Shouldn't the bitcoin price be higher on USDT shops like Bitfinex and Binance then, vs other exchanges? I'd expect USDT buying pressure to drive up the price, while elsewhere there would be selling pressure to get real USD out. Yet this doesn't seem to be the case.

Yeah, the risk premium is surprisingly low: http://www.untether.space/

My guess would be that the Usdt is somewhat backed, so you can exchange some amount of it for usd and as long as no one questions any of that arbitraging it across exchanges is basically free money. Once tether gets a bank run and it becomes obvious it's not fully backed, that spread will shoot up

14 billion on record, 4% of all bitcoin being held by these companies.

https://bitcointreasuries.org/

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