Key Takeaways
- Arthur Hayes suggests Tether is in the early stages of a massive interest-rate trade, betting that Fed cuts will hurt Treasury income but send Bitcoin and gold higher.
- He argues that a major drop in Bitcoin and gold positions could wipe out Tether’s equity.
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BitMEX co-founder Arthur Hayes argues that Tether is positioning itself for an upcoming Fed rate-cut cycle by shifting a greater share of its reserves into Bitcoin and gold.
Hayes wrote on X on Saturday that Tether’s most recent attestation suggests the firm is preparing for a rate-cut environment, which would reduce returns on Treasuries but could drive up the price of Bitcoin and gold.
However, the analyst cautioned that a sharp decline in those riskier assets could strain Tether’s equity cushion and reignite long-running questions about USDT’s solvency.
The Tether folks are in the early innings of running a massive interest rate trade. How I read this audit is they think the Fed will cut rates which crushes their interest income. In response, they are buying gold and $BTC that should in theory moon as the price of money falls.… pic.twitter.com/ZGhQRP4SVF
— Arthur Hayes (@CryptoHayes) November 29, 2025
According to the latest reserve report, Tether holds around $181 billion in assets to back USDT. The bulk of this is in cash and liquid securities, including Treasury bills, repo, and money market instruments.
Other holdings include nearly $13 billion in precious metals, close to $10 billion in Bitcoin, and more than $14 billion in secured loans, along with several smaller investment categories.
Tether was recently assigned a “weak” stability rating by S&P Global Ratings after boosting its holdings of riskier assets, including Bitcoin, within its reserves. S&P noted that this approach increases the likelihood of undercollateralization in the event of heightened crypto market stress.
In response, Tether said the S&P’s rating framework is outdated and does not reflect the scale of its daily settlement flows.