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USDT will not collapse

USDT is a stablecoin issued by Tether and led by Bitfinex. There have been USDT holders who questioned its issuance in the U.S., leading to a price drop of 20% to 30%. In 2019, USDT experienced a significant fluctuation, with prices dropping to $4.

The issuance mechanism of USDT is that for every USDT issued, one dollar must be deposited in its designated account. However, I cannot assert that Tether has 100% reserves, but at least 90% is sufficient.

The reliability of a currency depends on its liquidity, not the collateral behind it. If you take dollars to the Federal Reserve, you can't exchange them for anything; does that affect the liquidity of the dollar? As long as the market continues to accept it, it is valid, and that is the power of liquidity.

From this perspective, USDT does not need excessive collateral; a 10% reserve is enough to meet the market's arbitrage demands.

So, is USDT a kind of "counterfeit money"? Indeed, but isn't the dollar itself also a kind of "counterfeit money"? The Federal Reserve can issue currency at will; how is that different from a counterfeiter?

In short, as long as the dollar does not collapse, USDT will not collapse.

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