Will USDT collapse and run away? Don't be fooled!

There are rumors of a storm in the cryptocurrency world again! Tether and USDT have repeatedly been rumored to collapse and run away, but the company reported a net profit of up to $4.5 billion in the first quarter. What’s going on?

In the eyes of some, the cryptocurrency world is just a Ponzi scheme and a big fraud. Bitcoin is said to be a tool for the U.S. government to exploit retail investors, and USDT is viewed as a Wall Street scam that will inevitably collapse. However, anyone with a little understanding knows that Bitcoin cannot be issued by the U.S. government; this needs no further explanation. Today, let's analyze whether Tether's USDT will indeed face a crisis.

1. Excessive issuance leads to a collapse? Not possible!

As a stablecoin, USDT is pegged to the U.S. dollar at a 1:1 ratio. Theoretically, only 1 USDT is issued when 1 dollar is deposited to maintain price stability. Some are concerned about excessive issuance, but a look at the annual quarterly (BDO) audit report on the official website makes it clear that there is oversight and it is not issued arbitrarily.

2. Misappropriation of funds for contracts leads to a collapse? Pure rumor!

The official website provides detailed information on fund reserves; the so-called misappropriation of funds for contracts or investment in altcoins is nonsense. Most of the funds are invested in U.S. government bonds, reverse repos, money market funds, and other low-risk assets. Such a prudent asset allocation results in an extremely low risk of collapse.

3. Poor profitability leads to a collapse? Completely wrong!

USDT has a diverse and stable profit model:

1. Interest income: The fiat currency deposited by users is used to purchase U.S. government bonds, with an annual yield of about 4%-5%.

2. Service fees: Each user is required to pay $150, and there is a 0.1% transaction fee for deposits and withdrawals.

3. Lending business: Issuing USDT for enterprises and collecting interest.

4. Buyback profits: When market panic arises, USDT is bought back at low prices and sold at normal prices once the market stabilizes, profiting from the difference. With these profit avenues, they can earn substantial profits in just one quarter.

4. High expenses lead to a collapse? Difficult to establish!

Tether's main expenses are primarily in employee and facility costs, and USDT advertisements are hardly seen on platforms like YouTube and Google, resulting in low promotional costs. Unlike exchanges and project parties that are laying off employees and cutting salaries, Tether's profits are stable. As a giant in the cryptocurrency space that combines the functions of a bank and a central bank, it is hard for them to suffer losses, making the possibility of a collapse extremely minimal.

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