Tether, the issuer of the USDT stablecoin, is facing heightened scrutiny over its financial strategy, which heavily relies on gold and Bitcoin reserves. According to analysis from Arthur Hayes, founder of BitMEX, a 30% decline in this hedging portfolio—valued at an estimated $10-15 billion—could eliminate Tether's equity and expose USDT to theoretical insolvency risks. This portfolio shift is tied to expectations of Federal Reserve rate cuts, which would reduce interest income from cash holdings, prompting Tether to boost its exposure to gold and Bitcoin as a hedge against fiat depreciation.
Hayes emphasized that the volatility of these assets, with Bitcoin historically experiencing drawdowns exceeding 50%, poses a systemic risk to the broader crypto market. USDT accounts for approximately 60% of the stablecoin market capitalization, raising concerns among exchanges and institutional holders who are demanding real-time balance sheet transparency and stress testing. In a related development, Tether acquired 26 tonnes of gold in Q3 2025, surpassing central banks like Kazakhstan and Brazil, and now holds 116 tonnes total—the highest among non-sovereign entities.
Thomas Lee of FSInsight noted that this aggressive gold buying by stablecoin firms could strengthen Bitcoin's long-term price outlook, potentially pushing BTC toward $100,000. Meanwhile, Bitcoin recently topped $91,000, with gold breaking records at over $4,190, driven by investor risk appetite and anticipation of lower interest rates. Analysts warn that if Bitcoin fails to hold above key resistance levels, it could retreat to support zones around $84,000-$80,600, highlighting the interconnected risks in Tether's strategy.
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