Tether is to bitcoin as EFTs are to the stock market,
Would love to understand this a bit better. From what I know, Tether is kept pegged at a certain value basically by the ability of the issuer to keep buy / selling that that price and ensure there is liquidity. Am I right?
ETFs on the other hand are a basket of securities based on what they are for - but they are not pegged to anything. If that market crashes, the ETFs would crash as well. Is that correct ?
I'm going on some assumptions here, so bear with me. Regarding bitcoin, there are a number of wallet services that allow people to buy and hold bitcoin; most, particularly US-based services, have a simple and transparent ledger; Tether, by contrast, uses "tethers" as a proxy for currency but they grant tethers on credit, creating unfunded obligations that they exchange for currency. Due your own diligence, but the details are explained here: https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3
ETFs are supposed to be a basket of assets that trades strictly at NAV of the underlying assets, essentially representing a tool of expediency for large-block traders. Recently on this board and the GME subreddits, it has been claimed that ETFs sell and trade on underlying assets but have a 6-day window before demonstrating that they actually possess the assets that ostensibly comprise that same ETF. This allows ETFs to abuse this reporting window by trading a block of assets without owning them until later, which is a virtual short sale. I don't have the links on that, but if you search this board for GME posts on the last few days, you'll find them. The insinuation is that this 6-day window has been abused so routinely that it has grown out of control, creating hot potatos of unfunded assets, including GME shorts and stocks, with the underwriters playing musical chairs with their ETFs hoping to catch up before the next settlement dates in a vicious cycle attempting to avoid getting caught. Until the music stops nobody knows who's been cooking and who's just been smoking.
Anyway, that's what I meant. Hope that helps.
TLDR- tethers are only guaranteed by the company Tether which seems to be totally unregulated and definitely risky, so a huge portion of crypto may be unfunded and backed by nothing; ETFs have a regulatory loophole that allows them to be used for gambling, and for doubling down on bad debts, so they may be hiding large unfunded liabilities that will crash the market eventually. "May" ... Do your own diligence because afaik these have not been reasoned but definitely not proven.
Tether is to bitcoin as EFTs are to the stock market, i.e., it is a potential bubble that can subvert the entire market.
Would love to understand this a bit better. From what I know, Tether is kept pegged at a certain value basically by the ability of the issuer to keep buy / selling that that price and ensure there is liquidity. Am I right?
ETFs on the other hand are a basket of securities based on what they are for - but they are not pegged to anything. If that market crashes, the ETFs would crash as well. Is that correct ?
I'm going on some assumptions here, so bear with me. Regarding bitcoin, there are a number of wallet services that allow people to buy and hold bitcoin; most, particularly US-based services, have a simple and transparent ledger; Tether, by contrast, uses "tethers" as a proxy for currency but they grant tethers on credit, creating unfunded obligations that they exchange for currency. Due your own diligence, but the details are explained here: https://crypto-anonymous-2021.medium.com/the-bit-short-inside-cryptos-doomsday-machine-f8dcf78a64d3
ETFs are supposed to be a basket of assets that trades strictly at NAV of the underlying assets, essentially representing a tool of expediency for large-block traders. Recently on this board and the GME subreddits, it has been claimed that ETFs sell and trade on underlying assets but have a 6-day window before demonstrating that they actually possess the assets that ostensibly comprise that same ETF. This allows ETFs to abuse this reporting window by trading a block of assets without owning them until later, which is a virtual short sale. I don't have the links on that, but if you search this board for GME posts on the last few days, you'll find them. The insinuation is that this 6-day window has been abused so routinely that it has grown out of control, creating hot potatos of unfunded assets, including GME shorts and stocks, with the underwriters playing musical chairs with their ETFs hoping to catch up before the next settlement dates in a vicious cycle attempting to avoid getting caught. Until the music stops nobody knows who's been cooking and who's just been smoking.
Anyway, that's what I meant. Hope that helps.
TLDR- tethers are only guaranteed by the company Tether which seems to be totally unregulated and definitely risky, so a huge portion of crypto may be unfunded and backed by nothing; ETFs have a regulatory loophole that allows them to be used for gambling, and for doubling down on bad debts, so they may be hiding large unfunded liabilities that will crash the market eventually. "May" ... Do your own diligence because afaik these have not been reasoned but definitely not proven.