Doom To Fail: Tether Shorts Pile In As Hedge Funds Seek To Profit From Crypto Winter
28 June 2022 - 2:46AM
NEWSBTC
The crypto ecosystem is still dealing with the fallout caused by
the collapse of the Terra ecosystem, the company behind stablecoin
USDT, Tether, is being targeted by hedge funds. Confirmed by Paolo
Ardoino, CTO at Tether and crypto exchange Bitfinex, via his
Twitter account. Related Reading | Cardano Formed This Pattern
On Its Chart, Where Is The Coin Headed? According to the rumors,
hedge funds have been opening short positions on Tether (USDT) and
have been actively seeking to create panic in the crypto industry
to affect the stablecoin. Peg 1:1 to the value of the U.S. dollar,
these entities might be trying to replicate the events that crash
LUNA and UST. These digital assets were at the epicenter of the
Terra ecosystem, the latter operated as an algorithmic stablecoin
pegged to the U.S. dollars until it crashed losing over 90% of its
value. According to Ardoino, hedge funds might try to profit by
creating the conditions for a similar crash with USDT: I have been
open about the attempts from some hedge funds that were trying to
cause further panic on the market after TERRA/LUNA collapse. It
really seemed from the beginning a coordinated attack, with a new
wave of FUD, troll armies, clowns etc. The outcome would be
different, as Tether’s CTO explained, these hedge funds would
allegedly try to trigger a massive capital outflow from the
stablecoin and destabilize its price. Ultimately, if the price of
USDT drops, the short players would “buy back tokens at a much
lower price”. These entities, Ardoino said, have been allegedly
spreading Fear, Uncertainty, and Doubt (FUD) on the stablecoin,
such as the rumors that claim Tether is not 100% backed by real
assets, and that it was exposed to fail investments. The Tether CTO
denied once again denied the rumors: Tether had/has in fact >=
100% of the backing, never failed a redemption and all USDt are
redeemed at 1$. In 48 hours Tether processed 7B in redemptions,
averaging 10% of our total assets, something almost impossible even
for banking institutions. Can Tether Follow LUNA/UST And Lose Its
Pegged? In that sense, Ardoino put into question the “billions” in
short positions taken by these hedge funds. The executive claims
USDT is a battle-tested stablecoin that has outlasted several
crypto bear markets, and even companies considered “the holy heroes
of our industry”. As Bitcoin and the crypto market trend to the
downside, Tether’s (USDT) total market capitalization saw an almost
20% drop. However, the stablecoin operates with a very different
mechanism than that of Terra’s LUNA-UST and seems unlikely to
follow the same path. USDT has always caused controversy in space,
but it has operated for almost a decade. The company behind the
stablecoin has been improving on its government contacts, its
transparency, and adding more assets to back USDT. Related Reading
| TA: Bitcoin Dips Could Be Limited, Why 100 SMA Is The Key As
a pseudonym analyst said on Twitter, this doesn’t mean the
stablecoin could never fail, but it does seem to suggest the “FUD
on USDT seems overrated”. The majority of Tether clients (based on
USDT issuance amount) are well-known market makers and trading
firms such as @AlamedaResearch, @CumberlandSays, @jump_, etc. 89.5%
of total USDT issuance was sent to market makers of Big CEX such as
Binance, FTX, OKX, Bitfinex, etc. pic.twitter.com/qQ4DHAIfuF —
alphanonce Intern (@alphanonceStaff) June 22, 2022
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