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USDT: Is the game of musical chairs finally over?

When the US Government cut off Bitfinex & Tether's banking in April 2017, the USDT peg slippped, The USDT:USD pair on Kraken dipped down to $0.89. Then Bitfinex announced that at their exchange, that going forwarrd 1 USD == 1 USDT - that the two would be completely interchangeable for users with KYC'ed accounts. Since then, Bitfinex has been the linchpin maintaining USDT's peg.

Unfortunately, yet another round of banking issues (there are both users who have made fiat withdrawals and deposits who have been waiting as long as 6 weeks with no update as to the whereabouts of their money), has caused the peg to fail again.

The market has been valuing USDT in the range of $0.95-0.98 for a few days. Now it is dropping, as people are starting to see the writing on the wall, starting to pull funds out of Bitfinex. Since there are no fiat withdrawal, this means buying crypto with their USDT which they can then move (and probably sell) at a different exchange. Last night the gap in BTC price between Bitfinex and Gdax was briefly greater than $1000. At the same time USDT dipped to $0.75 on Kraken.

To add to the FUD, Kucoin suspended USDT deposits and withdrawals last night.

I expect there will be panic as people realize there isn't remotely enough liquidity for everyone holding USDT to get out of it.

About two hours until the eastern seaboard of the USA wakes up. How will they react to the mess that has developed overnight? If negatively, then this will probably be the straw that breaks the camel's back, sending BTC to new lows.

What do you think?
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