Tether Says Hedge Funds Shorting USDT are Losing Money, Don’t Understand Crypto Industry


A new blog post from Tether has revealed that hedge funds shorting USDT are losing money.

According to Tether, USDT shorting reached a crescendo in the last two months when Terra imploded and the broader crypto market crashed.

Per the report, the short positions were fueled by the belief that Tether’s USDT could also follow in the steps of Terra’s UST by imploding too.

However, while the stablecoin briefly depegged on some crypto exchanges because of the broader market issues, it has been able to regain and maintain its peg against the US dollars while also honoring redemptions of over $14 billion during the same period.

According to Tether, the short positions against the asset showed the level of fundamental misunderstanding people, including investors, have about the industry.

Traders longing USDT profiting

The blog post said that the hedge funds shorting USDT have provided an avenue for those taking long positions on the asset “to step in and collect funding from the other side of this trade.”

It continued that the hedge funds believe that they have “found a risk-free way to go short on crypto” which is not completely true.

Tether revealed that if there were not “sufficient USDT longs stepping in to collect funding, this rate would be much higher. These traders have shown they are more than willing to be long USDT and collect the fees paid by hedge funds going short.”

Tether vs Competition

The stablecoin firm also touched on the subject of the increased competition within the space.

According to the firm, a clearer picture of the competition between USDT and its competition can be seen in the 24 hours trading volume of both.

Per Tether, USDT’s trading volume is roughly 10x that of its closest competitor. The firm continued that this figure points to USDT’s utility and adoption.

A recent Arcane research report had predicted that USDC would supplant USDT as the dominant stablecoin in the market by October.