A 30% drop in Bitcoin could make Tether ‘insolvent,’ warns Arthur Hayes

Tether’s USDT stability downgrade by S&P World Scores continues to elicit completely different views throughout the crypto group.

The stablecoin bought a damaging ‘weak’ ranking, with S&P World citing rising publicity to ‘excessive threat’ property like Bitcoin and gold. 

In response to the report, BitMEX founder Arthur Hayes said that Tether elevated its publicity to BTC and gold to front-run the everyday rally related to dropping Fed rates of interest. Nevertheless, he cautioned, 

“A roughly 30% decline within the gold + $BTC place would wipe out their fairness, after which USDT can be, in concept, bancrupt.”

Supply: Tether

In response to the Q3 report shared by Tether, however not independently verified by third events, the agency’s USDT was backed by $139 billion in money and money equivalents.

The remaining backing was dominated by ‘illiquid’ property, together with gold, BTC, loans, and different devices. 

Blended views on perceived Tether dangers

Some analysts supported Hayes’ warning. On his half, Ryan Berckmans, an Ethereum group member, said, 

“Why are ~$40B in USDT backed by property riskier than money and money equivalents? When my stablecoin operator retains all of the yield, I at the very least need them to be totally backed by risk-minimized reserves.”

Per Tether’s transparency report as of Q3, it had $174 billion in liabilities for USDT.

In comparison with about $140B in money and money equivalents, it meant that in a liquidity run and widespread immediate redemption, Tether can be brief by $34B. 

For Akash Community founder Greg Osuri, the disparity with money property was a ‘ticking time bomb’ for USDT. 

Supply: X

Tether’s BTC hit $8B

Put in a different way, Tether was solvent paper, its $181 billion property surpassed its $174 billion in liabilities. Nevertheless it was not totally liquid and operated like a fractional reserve design utilized by conventional banks. 

However others disagreed with Hayes’ take. For instance, Mr. Anderson, countered the 30% decline and added, 

“A mark-to-market dip isn’t insolvency. Insolvency means property < liabilities, and even after a 30% hit, they’re roughly at parity. The actual threat with any stablecoin is liquidity throughout a run, not “BTC dropped 30%, subsequently Tether died.”

Joseph Ayoub, a former crypto analysis lead at Citibank, additionally debunked Hayes’ warning and highlighted, 

“Tether isn’t going bancrupt, fairly the alternative; they personal a cash printing machine.”

As of 2025, Tether was amongst the highest BTC holders, with 87.2K BTC value about $8 billion at present costs. It has additionally doubled down on gold and have become the high purchaser in Q3. 

Supply: Arkham

Last Ideas 

• Analysts had been divided on the underlying stability threat of Tether’s USDT based mostly on its self-reported reserve backing property. 
• Tether doubled down on BTC and gold as reserve property in 2025, rising its stash to 87K BTC.