The Tether Put: Crypto Equivalent of Credit Default Swap?

in #theta4 years ago

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Cryptocurrency market makers say they're fielding inquiries about how to bet on a falling price for the dollar-pegged stablecoin USDT.

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Tether, the largest dollar-backed stablecoin, penetrating nearly every nook of the crypto market, is in the news again and for inauspicious reasons.

Perma-bears who are worried that the lingering tether (USDT) scare would eventually culminate in a breaking of the buck might now be searching for the crypto market equivalent of a credit default swap – a derivatives instrument that allows buyers to bet on another trading counterparty’s creditworthiness.

The answer to that might be a put option on tether, essentially a bet that the stablecoin’s price will fall below its ostensible redemption value of $1. Some traders have been actively scouting around for such a trade, according to some players in digital-asset markets.

Tether Responds to Bloomberg Report, Saying It’s 'Repackaging Stale Claims as News'

“We do continually have inquiries on tether puts,” said Rich Rosenblum, co-founder, and president at institutional market maker GSR Markets.

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