there's some irony that a government that has no jurisdiction in this area and prints its own usd has subpoenaed a private organisation that also prints its own tethers personally i think bitfinex will be fine and has plenty of resource to back the tethers.
What sort of impact on the market would the findings that Tether is not 100% backed have? It’s worth about $2.2billion compared to BTC’s $140billion. Reading media stories it is assumed it would have a devastating impact, I’ve seen figures quoted that it would reduce market cap rates by as much as 90% of current figures. That seems excessive to me.
I doubt it will be 90%, but can drop the market by 50%. Tether added a lot of support at key points and provided easy liquidity and confidence. The next step is understand the bigger effect Tether and Bitfinex had together as Bitfinex used Tether to underpin it's leverage trading. Also the $2 billion of Tether is meant to be real money in the system as Tether is a fixed price at $1, where as Bitcoin's $140 billion is only market cap, where most people would have purchased BTC at a lower price plus leverage trading = multiplying factors. So maybe only $14 billion of real money is flushing around for BTC. But who knows. e.g. 100 Tether tokens get sold for $1 (fixed rate with no leverage) market cap is $100 and $100 "entered" the system. Now 100 Bitcoin gets sold, 90 sold for $1 and last 10 for $100, marketcap is $10,000 but only $1,090 entered. Then say there is a 5:1 leverage on the last 10 trades, so now only $290 entered the system to create a $10,000 marketcap. So you can see how a small amount of input can = a much larger output.
I actually don't think it would have a massive impact on the market Everyone in the market has been aware of this possibility for quite some time now, and 2.2B is barely anything of a 400B+ market The current drop in prices would possibly have some of this Tether concern baked into already anyway
