After the 4th of July celebrations, I took a drive in my Jeep Wrangler Rubicon 392 to reflect on some pressing questions from the crypto community. Today, we’re diving into two big topics: the possibility of a next black swan event connected to Tether, and whether gold is a good hedge against such financial shocks. Plus, I’ll share some advice for anyone feeling discouraged after buying crypto at the top of the market. Let’s get into it.
Could Tether Be the Next Black Swan Event?
There’s been a lot of chatter about stablecoins and their stability — especially Tether (USDT). Many wonder if Tether could trigger the next black swan event in crypto. My take? No, I don’t believe Tether will be the next black swan.
Here’s why: Tether was created by a company called iFinex, also behind Bitfinex exchange and the LEO token. Back in the day, Bitfinex had some serious troubles — including a hack — which led to the creation of Tether as a way to stabilize trading and provide liquidity.
Yes, Tether’s history is pretty shady. There were controversies over whether each USDT was truly backed 1:1 by dollars, and audits were done by smaller firms rather than the big four. Then there was the infamous $850 million banking dispute, where Bitfinex lent itself USDT to cover missing funds. This led to a lawsuit from the New York Attorney General, and many thought Tether would collapse.
But Tether survived. The lawsuit ended with fines and a requirement for quarterly audits. They even raised over a billion dollars through the LEO token to cover financial gaps. Today, Tether is thriving, making billions each quarter from transaction fees and minting/redeeming activity across various blockchains.
Tether also holds massive Bitcoin reserves — reportedly over 100,000 BTC, making them one of the top holders. They back their USDT with a mix of dollars, treasuries, and other assets, and audits have become regular and more transparent.
So, while the past was rocky, Tether has grown so large and profitable that a collapse seems unlikely. That doesn’t mean it’s perfect — USDC, another major stablecoin, has its own issues, like near-collapse when Silvergate Bank almost failed. The truth is, none of these stablecoins have spotless histories, but both USDT and USDC have become vital parts of the crypto ecosystem.
Is Gold a Good Hedge Against a Black Swan Event?
Many ask if buying gold is a smart move to hedge against black swan events, especially those that might shake crypto markets. I’m not against gold — it’s been a trusted store of value for centuries and doesn’t experience the wild swings Bitcoin does. But personally, I don’t see gold as a sufficient hedge for crypto risks.
Why? Even if you hold gold, it probably won’t offset the dramatic drops crypto can experience. Unless you put a huge chunk of your portfolio into gold (think 50% or more), it won’t balance out the volatility of crypto assets.
For me, if I wanted to hedge and felt scared, I’d simply pull out of volatile crypto and hold stablecoins or cash, then wait for a better buying opportunity. That’s a more direct way to manage risk than moving into gold.
As for whether another black swan event is coming, it’s always possible. We’ve had shocks and crashes before, but Bitcoin has always bounced back. Even if a massive Tether liquidation happened, ETFs and institutional buyers could absorb that supply quickly, stabilizing the market in weeks.
Just recently, around 80,000 Bitcoin from ancient Satoshi-era wallets moved, sparking fears of a big sell-off. While that caused a small dip, it wasn’t catastrophic — the market recovered swiftly. So, black swans may happen, but the crypto ecosystem is more resilient than many realize.
Advice for Those Who Bought Crypto at the Top
Now, let’s talk about Sergio’s question — he asked how to encourage his dad, who bought Bitcoin and other big-cap crypto at all-time highs earlier this year, but now doubts the whole thing and wants out.
This is a common story. Many people enter crypto with FOMO or hoping for a quick buck, then get discouraged when prices fall. So, what do you say to keep someone motivated to keep dollar-cost averaging (DCA) and stay in the game?
First, I’d say it’s important to take a step back and do some research. Understand why these assets were so hyped, and whether they have staying power. If it turns out it was just a bubble with no fundamentals, maybe cutting losses is the right move.
But if you dive deeper into Bitcoin, you’ll find it’s quite different from other assets. It’s the greatest store of value we have due to its scarcity, decentralized network, and growing institutional adoption. Over the last 15 years, no asset has appreciated as much as Bitcoin. For instance, the person who moved 80,000 BTC recently bought at around $78 — their return is in the millions of percent.
So, encourage your dad to learn about Bitcoin’s unique qualities and why many believe it’s here to stay. For altcoins like XRP, Solana, or Avalanche, research their ecosystems, partnerships, and developments. XRP, for example, is developing a new stablecoin and smart contract capabilities, with ongoing legal progress. Solana leads in NFT and DeFi volumes and has already secured spot ETFs.
In short, knowledge is power. Staying informed helps investors make rational decisions rather than emotional ones. If your dad still thinks it’s all a Ponzi scheme or the bubble burst forever, then there’s little you or I can do. But Bitcoin’s recovery and long-term growth should at least motivate a deeper look.
Final Thoughts
To wrap up, Tether’s past was rocky, but today it’s stable enough that I don’t see it triggering the next black swan event. Gold can be a hedge, but it’s not my preferred tool for managing crypto risk. And for anyone who bought at the top and feels down, take a breath, learn why crypto exists, and decide if it’s worth holding for the long run.
Crypto and Bitcoin markets can be volatile and unpredictable, but they’ve shown remarkable resilience. Staying informed and patient is the best way to navigate these waters.
If you want to keep the conversation going, keep submitting your questions and stay curious. The crypto world moves fast, and there’s always more to explore.
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