Short sellers have been betting against the stablecoin Tether, which a Wall Street Journal report notes has a price that shouldn’t move.
But firms such as Fir Tree Partners and Viceroy Research put substantial bets on the guess that Tether’s price will fall.
The short sellers mention a variety of issues, saying that some of Tether’s commercial holdings come from “shaky Chinese property developers,” and others are unhappy about the lack of transparency in Tether’s accounting.
Tether is the most popular currency for trading bitcoin and is supposed to be pegged to the U.S. dollar. The WSJ report noted that there’s around $82 billion in Tether in circulation, and it’s the largest stablecoin.
Tether, WSJ wrote, is essential for the crypto ecosystem, with traders on big exchanges often using it as an easier way to buy crypto.
The report goes on to say that the short sellers follow a pack of regulators, lawmakers and others who have spent lots of time trying to get details about the cryptocurrency, “whose usage has far outpaced its transparency,” the report said.
There have been some hedge funds setting up short sales of Tether with Genesis Global Trading, a crypto brokerage for professional investors, according to co-head of trading and lending Matt Ballensweig.
He said there had been around a dozen funds talking about doing the same with Genesis, though many of them didn’t move ahead.
PYMNTS wrote that stablecoins have “already lost” some big battles, including the way numerous countries including India, Indonesia, Malaysia, Thailand and Turkey have all banned crypto as a form of payment.
And the argument against stablecoins is that they could compete with national fiat currencies, accelerate economic woes and, if they lose market confidence, could disrupt economies.