Why not invest in Bitcoin instead of burning stablecoins like Tether and Circle?

So, I've been thinking... over the last week, Tether (the one behind USDT) and Circle (who does USDC) have burned around $2.1 billion in stablecoins. Just imagine, that cash could have bought about 35,300 bitcoins. I mean, this might be legit info but could also be under wraps. I searched online for those burn transactions but didn’t find anything. I did discover that both Tether and Circle do these burns from time to time for reasons of their own. I'm really interested in hearing what peeps here in the bitcoin community think about all this. Assuming it’s all accurate, here’s my question: Wouldn’t it make more sense for them to use that money from these burns to buy and hold Bitcoin instead? And do these burns actually have any major economic effects on crypto? Like, could this lead to stablecoin inflation and possibly them losing their peg to the US dollar?

They burned the stable coins and redeem it in fiat so that USDT from Tether and USDC from Circle will not depeg but maintain its equivalent price with the United States dollar. This supposed to be moved to altcoins discussion because it is about stable coins which are not bitcoin but altcoins.

It can be legal issues like their stablecoins were not truly peg 1:1 like they said, but who knows. Years ago I was very skeptical about their claims of 1:1 peg for their stablecoins especially with their stablecoin mint rate. This is still with me now but honestly recent years, Tether and Circle actually engaged more in the USA bond market and traditional finance in the nation, so it's sort of foundation for their companies and stablecoins. Collapse of Tether will bring issues to not only Tether USD, the cryptocurrency market but likely the USA government too, so I am optimistic that Tether and Circle will be well. Even so, it does not mean that I recommend people to store their money in stablecoins. They can choose between bitcoin and fiat currencies, or choose both, but stablecoins for money storage in long term is not my advice. PSA: Most Stablecoins Can Be Frozen, Even in Your Own Wallets.

This is is their burning that's supposed to be excessive removal of USD which has been redeemed, and when there is also too much demand for USDT, they print more and add to circulation. How does that work? And all the frozen USD which is above $4b do they also burn it, or convert it into personal use, since it won't be returned to the owners?

We don't need to experience this before bitcoin network can be stable or profitable as well, coin burning is only common to altcoins and not in Bitcoin network, the only similar experience in this manner is when you lost your bitcoin and this is assumed to be spread across other bitcoin holders value as your contribution to the network, bitcoin has everything it takes to maintain ever increasing in value because of its acceptance and network, knowing about it profitability will also make it more volatile for people to find an entry and exit point in buying and selling Bitcoin.

So, tiny bit less marketcap for USDT and less USDT out there. Buying BTC with it wouldn't serve the same purpose, as same amount of USDT would still exist. You might as well ask what's the reason for then to issue more USDT periodically. Maybe they need more fiat money, or are issuing that same USDT it in somewhere else, in a different form or a different chain. Maybe they are trying to match their amount of USDT with right amount of reserves required by MiCA regulations. Who knows. What ever the reason is, this has no effect to rest of the cryptocurrencies.

You are right, I've come across some people who hold stables and still claim to be invested in crypto, and I wonder how holding stables translates to thing an investment even if its staked I believe stables were developed for the sake of traders who would really something to hold when ever bitcoin becomes very unstable and uncomfortable to hold.. For me, only time I hold stables is when bitcoin goes into a dangerous volatility mode like in extreme bear season, and this is simply to wait for the price of bitcoin to fall to a certain (target price) so I can buy in. Now back to the discussion, ive read every comment so far and I still say, what if they stop the burning and simply invest that money in bitcoin, I believe it will greatly help the market, money burnt is useless right? Why not buy bitcoin with it and maybe hold it forever, since they are always going to print more stables when demand rises?

https://ambcrypto.com/is-tethers-mica-setback-creating-a-bearish-q3-setup-for-crypto/ I don't know about "outflows," but that could also mean burning. It means they're actually reducing supply because global market demand is potentially declining until Tether is willing to change its stance to be more lenient with MiCA regulatory changes.

Yes, holding stable coins is not an investment, it is very possible that the people you are talking about are from countries that have high inflation rate like Venezuela and turkey. People from countries with low inflation rate having strong currencies like Kuwaiti dina will not say something like that. There could be a way the exchanges can have dollar, euro and other fiat, you can see them as pairs on the exchanges now which should let us know that stable coins are not necessary. Stable coins are created also for developers to make money from it.

No, because this is not real "money", it's only numbers. They have full control over their supply, so they can create coins out of thin air. As long as it sits idle and they don't put it into circulation, this is only a number in their database (only that it can be seen publicly because it's on a blockchain). But as long as they offer it on the market, they need it to be backed with assets, and demand has to exist for it. So these burns only indicate that there is less demand for the stablecoin. And if they burn it, they need less assets to back it, which is better for their efficiency. Buying Bitcoin instead would mean that they put it into circulation. This means they have to back it. And the stablecoins don't disappear when they buy BTC: they change ownership. In the case of USDT for example this has the effect that the USDT side of the USDT/BTC order book becomes thicker. A single BTC buy would not have a big effect, but in the long run, that would lead to a lower price for the stablecoin (measured in BTC) and thus increase the danger of a de-peg. They thus could do this only if there is a demand surplus coming from BTC, i.e. many Bitcoiners trying to sell their BTC for the stablecoin. It's exactly the other way around: if they didn't burn and instead retain stablecoins in circulation which have no demand, then this could have a negative effect and even a depeg risk in the long term, as explained above. Said simply: these stablecoins are not "needed" at that time. So they can burn them and liberate assets they hold to back them. There could be a psychologic effect if for example USDT was burning and USDC was not: this could indicate there's less demand for USDT than for USDC and create fear among USDT holders. But that difference, I assume, has to be enormous to really put the USDT peg in danger.

The stable issuer burn its coin doesn't always mean they're burning it. There are some reasons why they do it. 1. Redemption, entity cv stablecoin to fiat 2. The down in the backing, the down in the asset used to back stable coin forced issuer to burn it to retain stable coin to always 1:1 3. Crosschain tx, sending stablecoin to the different blockchain for liquidity purpose. I also remind you tether owned around 5% of BTC in their porto to back its stable coin. So i don't think you need to tell them to buy bitcoin.

That makes sense and that's an easy decision but I think that these stable coins company have been in the hands of the regulators and this isn't a decision that they like to do. There can be some issues related to printing more money out of thin air and they don't want that to happen. I remember in the past whenever Tether prints more USDT and that actually reflects to the price of Bitcoin positively because that's what they probably does when regulators were not yet strict on them.

Burning stables have no inherent benefits to their holders. It's not like there are intrinsic benefits to being a holder of both so I have absolutely no reason why they didn't just use the table coin to buy bitcoin and destroy those bitcoin rather than just burning stablecoins that does nothing for the greater good. Good move for the wrong reasons.

That doesnt benefit the community, and they are under no obligation to do it. But burning tokens bring plenty of value and meaning to their own business model. As some people have pointed out, the whole point is to maintain that 1:1 ratio between circulating token and actual reserves, and that ratio is what keeps their entire business alive. If they neglect to maintain this balance, even a small slip up could cost them dearly and might even lead to their own collapse.

The token to burn maybe come from frozen hack funds or something like that or they are reducing their reserves for some reason and want to adjust circulating supply. If that is the case, buying bitcoin would cause their stablecoin depeg isn't it? more stablecoin in circulation than the reserve they hold making it not 1:1.

Burning stable either now or you want to burn it latar, I don’t think it has any benefits on the holders even in a long term market, it doesn’t matter anymore to be burning stables, so I would mostly be more concerned on bitcoin instead, we know there are frozen hacks so it’s possible that this other once could actually come from somewhere that is all about burning that we absolutely doesn’t know anything about, I truly think it doesn’t benefit the community in any way.

That could lower the backing they have, and that could cause problems. They should always have what they say they have and for that reason we are not going to see this be a problem for the long term. If they do bitcoin then if the price drops, then that could cause a loss, and if they have a loss then it is going to be a problem. This is why the smartest thing to do for them would be burn it, because if they are buying bitcoin with what they do not have, then things could crash very quickly.

I don't understand why they advertise it. Even if tether burn all their usdt and just keep the supply at 100 usdt their coin's value still would be ~100 usd. So whats the point here for burning stable coins. If usd somehow got burn maybe we could get some benefits. Please explain me whats happening here what is the benefits for this burning.

There are two reasons why they won't do what you suggested. One is because stablecoin doesn't have the interest of Bitcoin at hand, so they won't benefit from anything by buying and burning bitcoin. Secondly, they are removing excessive dust with that burning (at least that's what they want us to believe) so spending the coin instead of burning it can make the supply to be above the physical locked dust which is supposed to be keeping the value on 1-1

This burning is simply removing the excess they have on both tether and circle to make sure their values don’t exceed fiat (usd) which they are pegged to and if they don’t remove they might be going above and then leaving them to be quarried by the authorities that gave them the backings! Is this what the whole thing is pointing at or I’m still getting it wrong?. However, if this saves them from getting de-pegged then I guess a better option even though it looks like waste of money in terms of how op sees it and some others too.