Arthur Hayes warns Tether’s Bitcoin and gold bet exposes it to major downside risk

BitMEX co-founder Arthur Hayes suggests Tether is initiating a large interest-rate trade, anticipating Federal Reserve rate cuts. Hayes believes these cuts will diminish Tether's income from Treasuries while simultaneously boosting the prices of Bitcoin and gold, into which Tether is shifting reserves. However, he cautions that if Bitcoin and gold positions experience a sharp decline, this could severely deplete Tether's equity cushion, potentially jeopardizing USDT's solvency. This concern aligns with S&P Global Ratings recently assigning Tether a "weak" stability rating due to its growing allocation to riskier assets like Bitcoin, which S&P noted increases the risk of undercollateralization during crypto market stress.

(Source：Crypto Briefing)