Tether, BTC & SOV - Systemic risk versus FUD

I am posting this here because SOV only exists because of BTC, which seems inextricably linked with TETHER:

Assuming that Tether is a ponzi scheme (whilst they belong to the often maligned centralised big media, these investigative journos are not interested in creating short-term FUD, they make their living from fact-checked follow-the-money trailing long-period investigations) four questions I like to ask this group as I am not that informed:

  1. Do you think Tether poses a systemic risk to crypto at large and it’s collapse would kill this bull run?

  2. How long does a ‘full exposure’ take in crypto where criminal investigators eventually would gain access to on-chain data, which reveals everything more or less instantly? Or if teh FED can Subpoena execs and force them to get audited? What time-frame between for example a subpoena and court-case announcement (which probably would be the day Tether collapses due to a crypto version of a bank run)?Reason for asking: I think it tool a while between the journos and the Feds in Bernie Maddoff’s case, and also between credible news reports in 2008 and the date of Lehman’s collapse. Both cases happened a long time ago and we are operating at lightning speed now. How fast could this really blow up?

  3. Where do I find on-chain metrics on Tether? I’d be interested to see outflows by whales into other assets as they surely would know more and have no interest in the scenario of (1) so a gradual drying off Tether into e.g. USDC or other Stablecoins might soften any potential blow. Or is my thinking flawed and it would collapse anyway, even if a few billions would be off-ramped before.

  4. What questions do you have regarding this risk that I am not asking (myself) right now?

Tether is becoming less and less influentioal in the crypto market. I would not worry so much about it. maybe 2 years ago was a problem. Not at the moment IMO.


About the first point: (1) Do you think Tether poses a systemic risk to crypto at large, as its collapse would kill this bull run?

No it doesn’t as this gets the causal order wrong. If there would ever be anything like a ‘Tether collapse’ this will be because a sudden and intense cryptomarket collapse already sets in, not the other way around. People would need to want fiat in return for their USDT suddenly and en masse, and this is only really imaginable if something else causes that flight to fiat. Any Tether collapse can’t cause a bear market, would just ignore FUD that claims otherwise. A Tether collapse could at most aggravate a bear market (and only a special rare sort of bear market, with a black swan kinda cause). And yet, Tether is dodgy af, good to use alternatives, more for principled reasons. My 2 cents.

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In the near-term: mass outflow of assets from now-defunct Tether liquidity pools back onto open market; cascading liquidation of leveraged short positions; temporary loss of confidence in (esp. ERC-20) defi and subsequent obliteration of speculative altcoins amid renewed regulatory pressure. Anyone’s guess as to what the net effect would be, but I imagine ‘extreme fear’ to be about the measure of it.

In the long-term? I suspect holders of BTC, SOV and for that matter, $FISH will be nothing short of jubilant.

Thanks for the clarification and your POV. I am not a FUDder, I am doing my DD and risk analysis, and today this this article renewed my bias against so-called stablecoin that backs it with commercial papers, which can swing hugely in value, 30-40% discount can easily happen if analyst ratings plummet, plus now they apparently mint new Tether against BTC. How is this not going to melt one day? The entire crypto-system operates on open-source, permissionless auditing etc. so these people, who have dodgy business practices also with Bitfinex, should play by the rules? Really? Everything in me says no. The question remains, whether other stable coins could stem a fall-out and not make a negative stable coin event trigger the next bear market.

Why ERC20 DeFI if Tether collapses? My understanding is that Tether is closer linked to BTC than any other coin. Or is this a wrong or incomplete perception?

Thanks for your comment. Which is the most influential cross-chain stable coin in your view?