Key Concerns Regarding Tether's Holdings
Arthur Hayes has raised significant concerns about Tether's balance-sheet risks, warning that the stablecoin giant faces potential unwinding if market conditions shift. Hayes's assessment, shared on X, suggests that Tether's current position is vulnerable to changes in market sentiment and interest-rate expectations.
Hayes framed the situation as an early indicator of stress related to interest-rate expectations, suggesting that Tether anticipates the Federal Reserve will implement rate cuts. He noted that lower interest rates could negatively impact the company's income derived from Treasuries and short-term instruments. To counterbalance this potential income reduction, Tether has increasingly relied on gold and Bitcoin. Hayes highlighted that these assets are known for their sharp price fluctuations during periods of market uncertainty.
Hayes Raises Concerns About Tether’s Position
Arthur Hayes stated that Tether is engaged in a substantial interest-rate trade through its reserve management choices, citing recent audit figures to support his analysis. He pointed out that Tether's combined holdings of gold and Bitcoin now exceed $23 billion.
The company reportedly increased these allocations as Treasury yields reached their peak. Hayes believes this strategic shift signals a strong expectation of declining interest rates, which would, in turn, reduce Tether's income from government bills.
According to Hayes, this strategy carries a considerable downside risk. He argued that a 30% decrease in Tether's gold and Bitcoin holdings could deplete the company's equity, potentially triggering solvency concerns for USDT.
He further suggested that some major holders might soon demand real-time visibility into Tether's balance sheet, seeking more detailed information about the composition of its reserves. Hayes also indicated that exchanges might begin to request new disclosures from Tether.
Tether currently holds the largest market share among stablecoins, with a circulating supply of approximately 184 billion USDT tokens. Its closest competitor, USDC, has a circulating supply of 76.57 billion tokens.
Market volatility has intensified discussions surrounding Tether. Bitcoin experienced a 17% decline over the past month, followed by a 6% rebound in the last week of November. BTC reached approximately $91,500 during this recent recovery, contributing to a slight improvement in market sentiment.
Tether Defends Its Assets as Market Pressure Builds
Reports indicate that Tether manages total assets exceeding $181 billion. A significant portion of this portfolio is invested in highly liquid securities, including Treasury bills, repo agreements, and money-market instruments.
However, disclosures also reveal broader risk exposures. Tether has expanded its investments into secured loans, precious metals, venture capital, and Bitcoin. These investment categories have attracted renewed scrutiny following a weak stability score issued by S&P Global Ratings, which criticized Tether's overall reserve structure. Tether has refuted this assessment, labeling S&P's methodology as outdated.
Tether's operational adjustments have also been a subject of recent headlines. The company concluded its mining venture in Uruguay due to an inability to secure favorable energy pricing terms in the region.
The stablecoin issuer continues to exert considerable influence in global financial markets. USDT liquidity is essential for trading across numerous major exchanges, and traders depend on the token for rapid settlement during volatile market sessions.
Hayes anticipates that the coming months will bring increased attention to Tether's balance sheet. He believes that any decline in the value of gold or Bitcoin could amplify existing concerns. He predicts that mainstream media outlets will likely increase their coverage as market uncertainty grows. Many observers have noted a rising interest in Tether's reserve transparency, with some traders highlighting the scale of Tether's holdings and suggesting the company faces higher expectations than ever before.