Crypto stable coins

So a crypto stable coin, Terra, has lost nearly 99% of its value in the past week.  It was supposed to stay at $1, akin to its more conservative MMF distant cousin.  Feels like this could be crypto's equivalent to money market funds breaking the buck moment in 2008.    

In an unstable and risky market, you make yourself sound like an idiot when you say things like investing in a copy cat company such as rivian.  If you believe in that industry then buy stability such as Tesla for the recovery. 

  • Hugey makes himself look like an idiot by simply existing.
  • He's not buying Rivian, he's buying Evian while en route to the Slough Wetherspoons for a solitary night hunched over the fruities.
  • The bagging you do is moving bags through Heathrow for customers.
  • Before bagging up your meal for one at Slough Nisa.

Heh. It was only a matter of time before a “stable” coin had a proper meltdown.

”But it’s value will always be stable because our ever so clever algorithm ensures it will be so and algorithms always perform in the real world exactly as planned on my computer”

  • Before bagging up your meal for one at Slough Nisa.
     

This is the sickest burn I have seen on here for ages. Do me next please. 

But it’s called a STABLE coin! It literally can’t drop in value.

That gives me an idea, HG, do you want to help me develop a new coin to be called Guaranteed Market-Beating Returns Coin? Founders will be given a healthy proportion of the ICO to erm… ensure stability and good governance. 

  • Did you do so, Hugey?
  • You seem like the kind.
  • You probably still have your early 90s time shares on a dilapidated villa in Alicante.

It’s sad reading the stories of the people who have lost life savings. What I cannot understand is the people who piled in on the way down, expecting to get rich quick from a fast rebound. The project itself is good, but once the peg and the confidence is gone then you really are throwing money away.

Many sensible, consistently correct analysts have been calling Bitcoin down to £24/25k for months.

 

Then, once again, up from there.

Apparently a lot of the Bitcoin collapse is due to Terra, as the Luna Foundation had to sell hundreds of millions in BTC to try and maintain the peg.

Interesting that Tether broke the peg briefly. Even if there's questions around it, there's definitely a lot more real value in Tether than algorithmic stablecoins like Terra. 

I understand there are some real world assets behind Tether although there have been reports about how great or otherwise they may be.

There is a Big Read in the FT on Tether.  No doubt its defenders will say its old news and everything has been cleaned up, but does is sound like the sort of organisation that won't collapse at some point?

For several months in 2017, Tether had no access to banking services and at one point more than 85 per cent of its cash was held in a Bitfinex bank account, accounted for as a “receivable” from its sister company, the attorney-general James found, with the remainder held in an account in the name of Hoegner, the general counsel

Subsequently, in 2018, Tether lent Bitfinex $625m after the exchange suffered the loss of $850m that it held with a Panamanian payment processor called Crypto Capital Corp. Bitfinex has said a significant portion of the funds were seized by authorities and that it is trying to recover the money. In 2019, the US charged two people linked to CCC with bank fraud.

The loss did not become public until April 2019 when it was revealed in a court action brought by the attorney-general. Messages revealed by James’s office showed Devasini, under the alias “Merlin”, pleading for months with a CCC individual called “Oz” for the return of their cash.

“Please understand all this could be extremely dangerous for everybody, the entire crypto community. [Bitcoin] could tank to below 1k if we don’t act quickly,” he wrote in October 2018. At the time, it was around $6,500 per bitcoin, according to crypto market analysts CoinGecko.

Tether’s critics, including claimants in a US class action lawsuit, have pointed to this line to claim that the cryptocurrency has been used to pump up the price of bitcoin.

Hoegner, the Bitfinex and Tether general counsel, says it is “missing the point” to view that message as a price prediction, saying it was “born of frustration” and that Devasini had simply been trying to apply pressure to force CCC to “do the legal and right thing”. The company has described the lawsuit as “absurd and groundless”.

Bitfinex survived the crisis, helped in large part by drawing on the $625m from Tether in November 2018 and a fundraising in 2019. The Tether loan, subsequently formalised in a $900m credit line collateralised with shares in Bitfinex’s parent company, was unknown to the market until April 2019 and was at the heart of the attorney-general’s finding this year that Bitfinex and Tether had misrepresented the status of Tether’s reserves.

Tether and Bitfinex neither admitted nor denied the finding. Though the settlement came with a $18.5m fine, they say it has vindicated their position that Tether was always backed, even if at times its cash was held by Bitfinex.

“The loan was repaid in full [in January], with all interest due and ahead of schedule. So that was a good receivable all along, as we always have said it was,” says Hoegner.

The companies say the fine was “a measure of our desire to put this matter behind us and focus on our business”. Or, as Devasini’s WhatsApp profile picture puts it: “Life has no backspace.”

Terra was always on shaky ground when the underlying asset that was supposed to be used to keep the 1 token = $1 was actually BTC. USDT claims to have various assets in the more traditional sense (bonds,cash etc) but it's never been independently verified. USDC is allegedly safer so you can take a risk on that if you dont want to get caught out by CGT whilst you ride out the BTC drop.

Anyone else waiting for BTC to drop below it's 200 day moving average before starting to load up on BTC/ALT coins?

There is nowhere to go if there is a run on stablecoins.  When the reserves run out that's it.   Stablecoin reserves have contained and possibly still are, commercial paper with questionable issuers (allegedly in some case from related companies)