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Comment by Tenoke | Hacker News Reader

I've been wondering if shorting Tether (though dont think e.g. Binance has it on the list but some new dexs with leverage might allow it) isn't an extremely safe bet - no chance it will increase in value and a significant chance it will collapse eventually..

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Let me tell you about the swiss franc. It held a government peg 1.20 to the EUR, until one day in 2015 it didn't. Many traders (and whole forex brokerages) who held positions, believing the 1.2 line could never be crossed were, as they say, rekt.

There are several ways to take a short position on USDT. You can trade USD for USDT on Kraken exchange. A short position would be depositing USD and placing a limit order under 1:1. This involves locking up capital for the order. If it never loses the peg, you lock up capital forever for 0 gain. You can also borrow Tether via various defi loan markets, but you will have to provide collateral and interest payments.

Both have costs, be it fees, interest rates or opportunity cost. No safe bets in this game, except buy and hold bitcoin for periods > halving period.

I've been reading stories about tether's imminent demise for years and years. It's still going. Sure maybe one day it will collapse. Just don't bet on it happening any time soon.

You have some serious counterparty risk if the short is on something exposed to a btc/crypto drop

What if Tether (the organization) has been buying buying Bitcoin, and for some reason Tether imploding doesn't cause a crash in BTC?

It's entirely possible Tether actually have collateral worth more than their claimed 1:1 peg NAV.

The 1:1 peg is arbitrary and since they don't allow direct redemptions they could easily pull a stunt like repricing it to $1.50

Considering how heavily manipulated these crypto markets are, I'd say there's no "extremely safe bet".

All those exchanges use Tether substantially. A trader takes on all the tether risks by using them

Or it could just stay the same for years, and you bleed interest on the funding.

The problem with gambling on the complete collapse of a financial system is that you not only need to be right - you need to have a way to compel the guy on the other side of the trade to pay up.

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