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USDT won't crash

USDT is a stablecoin issued by Tether and primarily controlled by Bitfinex. There have been instances where USDT holders in the US questioned its issuance, causing the price of USDT to drop by 20% to 30%. In 2019, USDT experienced a significant fluctuation, with the price dropping to $4.

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

The reliability of a currency depends on its liquidity, not the backing assets. If you take dollars to the Federal Reserve, you can't exchange them for anything; does this 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 doesn't need excessive collateral; a 10% reserve is enough to meet the market's arbitrage demands.

So, isn’t USDT a form of “fake currency”? Indeed, but isn’t the dollar itself a form of “fake currency”? The Federal Reserve can issue money at will; how is this different from counterfeiters?

In conclusion, as long as the dollar doesn't collapse, USDT won't collapse.

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