I know it seems simple to short Tether, but in practice there doesn't seem to be a safe way to do it such that if the value plummets to almost zero (and takes much of the crypto ecosystem with it, including some exchanges) you could actually guarantee you'd get paid in US dollars at the end of it all without a long lockup period.
You could do something like buy Coinbase puts or something, but there is so much volatility baked in already, and there is no guarantee that (say) Coinbase actually falls if Tether does.
If you can think of a pure Tether short that still will work if trading is halted and exchanges fail, I'd love to hear about it.
In a short play you're paid immediately in USD. You sold the minute you acquired tether and now all you have is a Tether-denominated liability to pay back, which you assume will cost you 0 since you ll be able to get all those tether back at much less than you sold the initial loan.
Ofc, for servicing this liability in tether, you have to pay interests in USD, as long as the market stays irrational.
You need to find a large sleepy holder of Tether, fully bullish, who wants to make some easy premium money on your back while you make riskier short term downward bets on their back. A lawyer, a contract, a repayment schedule and hop, the matter is settled. We do that everyday in my investment bank in Hong Kong, with pension fund partners holding large inventories of stocks for their own clients and who dont know what to do with all that sleeping inventory.
You can contact us or our competitors if you have above 200k in cash to invest in the short and we'll find you counterparties for a fee. If you plan to short regularly a few millions a day, DM me.
Ofc, we d never touch a Tether short, we re not as insane as the crypto market. I d advise you to only short on short term bets, with full transparency with your counterparty so you avoid any sort of surprise. You should also pay a bit to hedge a catastrophic reversal, we have entire desks of people for that, so you can pay a bank for that service.
So from the large Tether holder's perspective, it's like a big deposit with USD interests and a very long time horizon, with the caveat that they'll get their principal back in USDT (with a rate 1:1) (eventually) instead of USD. And you do that through some legal contract, right?
I know it seems simple to short Tether, but in practice there doesn't seem to be a safe way to do it such that if the value plummets to almost zero (and takes much of the crypto ecosystem with it, including some exchanges) you could actually guarantee you'd get paid in US dollars at the end of it all without a long lockup period.
You could do something like buy Coinbase puts or something, but there is so much volatility baked in already, and there is no guarantee that (say) Coinbase actually falls if Tether does.
If you can think of a pure Tether short that still will work if trading is halted and exchanges fail, I'd love to hear about it.