Arthur Hayes Warns Tether ‘Macro Hedge’ Risks Equity Wipeout in 30% Bitcoin Correction
BitMEX co-founder Arthur Hayes has warned that Tether dangers balance-sheet insolvency if its Bitcoin and gold reserves undergo a 30% drawdown.
His November 30 put up targets the structural vulnerabilities in Tether’s newest asset allocation. He suggests the agency has tied its solvency to the efficiency of unstable threat belongings slightly than relying solely on the steadiness of presidency debt.
Hayes Critique Tether’s Gold and Stablecoin Holdings
Hayes’ evaluation attracts on Tether’s third-quarter 2025 attestation, which reveals a major rotation into non-fiat collateral. The report exhibits the issuer now holds $12.9 billion in precious metals and $9.9 billion in Bitcoin.
According to Hayes, this allocation represents a deliberate “rate of interest commerce.” His thesis posits that Tether is making ready for Federal Reserve charge cuts that might compress the yield on its large portfolio of US Treasury payments.
“[Tether] thinks the Fed will reduce charges, which crushes their curiosity earnings. In response, they’re shopping for gold and BTC that ought to in idea moon as the worth of cash falls,” Hayes noted.
However, Hayes argues this technique introduces uneven threat to the corporate’s skinny layer of fairness.
Hayes contends that this determine exceeds Tether’s surplus capital, rendering the agency theoretically bancrupt even when it stays operationally liquid.
He warned that such a situation would doubtless pressure giant holders and exchanges to demand a real-time view of the stability sheet to evaluate the security of the peg. Notably, this warning aligns with S&P Global’s decision to assign USDT a ‘5’ rating, the lowest on its scale.
Industry Stakeholders Defend Tether
Industry proponents keep that the insolvency thesis conflates stability sheet accounting with precise liquidity threat.
Tran Hung, CEO of UQUID Card, dismissed the warning as basically flawed.
He famous that the overwhelming majority of Tether’s $181.2 billion stability sheet stays parked in extremely liquid, low-risk devices. Indeed, the attestation confirms Tether holds $112.4 billion in US Treasury Bills and almost $21 billion in repo agreements.
Hung argues these “Cash and Cash Equivalents” present a liquidity wall enough to cowl the overwhelming majority of USDT in circulation.
Considering this, he argued that Tether would stay absolutely redeemable even when a market downturn eradicated its company fairness buffer.
“Tether has constantly demonstrated robust redemption capability, together with $25 billion redeemed in simply 20 days throughout the 2022 market disaster (FTX disaster), one of many largest liquidity ‘stress assessments’ in monetary historical past,” Hung noted.
Meanwhile, Cory Klippsten, CEO of Swan Bitcoin, pointed out that Tether’s leverage is more aggressive than that of conventional monetary establishments.
Tether is working about 26x leverage with a 3.7% fairness cushion. About three quarters of belongings are short-term sovereign and repo; one quarter is a mixture of BTC, gold, loans, and opaque investments,” Klippsten mentioned.
According to him, a 4% portfolio loss would erase the widespread fairness, whereas A 16% drop in the riskiest belongings would have the identical impact.
However, regardless of the structural leverage, he suggests the chance is mitigated by Tether’s sheer profitability. Indeed, the stablecoin issuer is on observe to record a profit of more than $15 billion this year.
Moreover, Klippsten additionally famous that Tether’s homeowners not too long ago withdrew a $12 billion dividend. Considering this, he argued they’ve the capability to recapitalize the agency instantly if its buffer have been ever breached.
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