And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact?
I don't even disagree that there are potentially major issues here but stating this as a fact is just silly.
> And I assume you are substantially short these markets then given that you know this for a fact and it's trivially easy to become wealthy one you know this for a fact?
That's not a safe bet.
https://en.wikipedia.org/wiki/Michael_Burry, which the film "The Big Short" is based off, correctly predicted the 2007-2009 collapse of the housing market, but nearly lost everything waiting for it to occur.
> During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct: He made a personal profit of $100 million and a profit for his remaining investors of more than $700 million. Scion Capital ultimately recorded returns of 489.34% (net of fees and expenses) between its November 1, 2000 inception and June 2008. The S&P 500, widely regarded as the benchmark for the US market, returned just under 3%, including dividends over the same period.
You can be right and still not be able to safely profit. Especially in crypto, where shady exchanges can wipe out a big short position pretty much at will with some wash trading.
borrow APY variable for USDT on aave on Ethereum is currently 3% apy.
If you can stomach the various risks involved (e.g. smart contract risk, exposure to ethereum 51% attack or something) then acquire any asset that AAVE has (e.g. USDC, Dai, ETH, BTC), deposit it, withdrawal USDT & sell the USDT thereby naked shorting USDT for 3% APY at current rates.
Those rates are low enough that it just doesn't seem like the market is that spooked yet.
Way too much counterparty risk in crypto markets. If there is an epic tether crash, I can't be confident that I'll get my payout. Compare this to established markets. I could log into my Charles Schwab account, make a short bet that Charles Schwab will go bankrupt overnight, and if I'm right, I know I'll get my payout.
Both of which are pretty big issues in the scenario we're talking about. When Tether crashes it will take down a significant chunk of the crypto world with it.
If the bid and offer are like $2 - $.50, do you consider that a "depeg" or not? I think liquidity will disappear, transaction fees will go to the moon, and there won't really be a meaningful "price" because trades won't be happening.
I wonder how easy it is to actually short Tether assuming the likely scenario where USDT goes the way of UST and trading is effectively halted. How does one cover their short when no trading is possible? In a regular exchange, there are rules about how to handle this but I'm not clear how it happens with crypto.
It’s simple. You are going to need collateral — BTC or ETH will do. Use this to borrow USDT from the open source money markets. Sell the USDT for BTC or ETH. You can double down by cycling this recursively and borrowing up some percentage of to your collateral if you wish to increase your leverage.
Meanwhile, you are paying 3-4% to whomever you are borrowing from. Addendum Meanwhile, you are probably funding an ecosystem something you are do not understand and against in the first place. :-)
I don't even disagree that there are potentially major issues here but stating this as a fact is just silly.