Month: February 2021

JPMorgan Joins Choir Warning of Tether’s Sway on Crypto Markets

Questions about the influence of Tether continue to swirl in cryptocurrency markets, even as the companies behind it defend the so-called stablecoin’s soundness.

Tether, or USDT, is supposed to be a ‘stablecoin’, always valued at USD 1 because it’s supposed to be backed by actual USD cash reserves. That’s been under question for years now. But it hasn’t stopped the token from being widely traded exchanges and used as part of financial products based on crypto:

It has a market capitalization of about $34 billion, according to CoinGecko — but in a sign of how much it’s used in the system, the 24-hour trading volume on Friday was about $107 billion.

– JPMorgan Joins Choir Warning of Tether’s Sway on Crypto Markets

Essentially, if USDTs are simply created out of thin air without needing to be backed by anything, unlike other crypto tokens that need to be mined, then the company behind Tether is simply a parallel US Federal Reserve.

About five months ago, the VC Chamath Palihapitiya made the case for Bitcoin as the ultimate insurance, a “bet against the ruling class”

“So [Bitcoin] is almost like a bet against the ruling class in some ways and making sure you have a small amount of insurance because… insurance is not something that pays off 50 cents to the dollar, insurance is something that pays off… 1000 bucks to a buck. You want these massive, massive asymmetric payoffs because you want to be sure that a small amount of insurance can basically make you whole… that’s why I just think that… you should take 1% of your portfolio, put it in Bitcoin, never look at it.”