Tether Depegging: Where to short Tether – USDT

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Tether Depegging: Where to short Tether – USDT

Uncertain times require certain strategies. We take a look at what steps you can take, to position yourself the best way possible in case a disastrous Luna-like event happens to the oldest and biggest stablecoin Tether – USDT.

Summarized; we take a closer look at the following strategies you as a crypto trader can utilize.

  1. Short USDT futures on Bybit
  2. Borrow and sell USDT 
  3. Sell your USDT 
  4. Stop trading USDT-pairs 
FUD Tether
The FuD reaper

Short USDCUSDT futures on ByBit

What is the fisrt speculative thing you can do? Go short. Go short USDT. This can be done on Bybit. In case of flash pumps, set your stop limits way higher than $1 and manage your risk. This is a hedging strategy. Not a generational wealth builder.

Be sure to set orders well above the market price, If market makers want to hurt retail and run all their stops, your bids will be filled and in profit as the dump continues.

usdcusdt Short
ByBit Futures Market

Borrow and sell USDT 

For DeFi users, there is always the possibility to go to onto a lending platform and follow the next strategy. 

  1. Deposit stablecoin (excluding Tether – USDT)
  2. Borrow USDT against your stablecoin
  3. Sell your borrowed USDT into another stablecoin (USDC, DAI, BUSD)

This low risk – high return strategy will only cost you interest. The worst that could happen, is that USDT remains pegged to the dollar and you pay interest on your USDT borrow.

Borrow only in USDT

If you borrow only in USDT, in the event that USDT goes to zero, your loan is repayable with practically nothing. If this is the case you’ve just gotten a free loan. Because the repayment is calculated in the useless Tether in a case of total collapse. 

Whale Shorting Tether on Compound

How to ‘synthetic’ leverage on a lending platform?

You can always create leverage when you loop and borrow multiple times.  Well, you sell, borrow, sell,… With 100 USDC you can easily short 1000 USDT when you loop. 

Please make sure your safety factor is at least 1.05. In order to protect yourself from liquidation.

Sell your USDT 

The easiest way to reduce your exposure to Tether – USDT  is to sell all your USDT positions. If you still are on the fence whether Tether – USDT could be in trouble and choose to remain calm and ‘stable’, you can always sell a portion of your holdings.

That being said, if shit hits the fan, you are probably too late to sell all your assets on time and could potentially lose everything what remained in Tether – USDT.

If you have Tether – UST in a non-custodial wallet, send it to an exchange or swap them through a trusted decentralized exchange.

Stop trading USDT pairs 

The next step of teetotaling from the Tethers is to stop trading USDT pairs completely. This can be a tricky one because almost all pairs with the most liquidity are trading against USDT. 

Consider this, if you have an open position trading futures with the base pair USDT and the price crashes to zero. You will be instantly liquidated because the denominator will be worthless. To mitigate that risk, you can choose to trade directly against the dollar or euro. 

Tether Crash
Poking Tether with a lever

That being said, we don’t want to spread fear and just want you to be safe in case of a Tether - USDT collapse. As always, be safe and consider your risk when positioning yourself in these markets. 


Disclaimer: Trading and investing in cryptocurrencies (also called digital or virtual currencies, altcoins) involves a substantial risk of loss and is not suitable for every investor. You are solely responsible for the risk and financial resources you use to trade crypto. The content on this website is primarily for informational purposes and does not constitute financial advice.

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