Arthur Hayes raises alarm over Tether's big interest-rate bet

Tether, the issuer of the biggest stablecoin, landed under scrutiny after Arthur Hayes suggested that it may be sitting on a balance-sheet time bomb. In an X post, Hayes argued that Tether is effectively making a massive interest-rate bet. He urged that it could turn ugly if gold and Bitcoin retreat from current levels.

Bitcoin price dipped by 17% over the last 30 days. However, it has managed to recover by around 6% in the last week. BTC touched $91,500 on the last day of November, pushing the crypto market to recover marginally.

Tether’s USDT is the biggest stablecoin in the market. It holds the circulating supply of 184.6 billion. Circle’s USDC stands second in the tally with a supply of 76.55 billion.

Hayes big warning

Hayes’s latest reading of Tether’s situation looked blunt. He highlighted that the company appears to be positioning for Federal Reserve rate cuts. This scenario would erode the yield it earns on its giant pile of Treasuries and cash-like instruments.

In order to offset that, Tether has been steadily increasing its allocation to what Hayes calls “hard assets.” It represents roughly $13 billion in gold and close to $10 billion in Bitcoin.

According to Hayes’s post, a 30% slide in the value of Tether’s gold-and-BTC bucket would be enough to wipe out the firm’s equity cushion. This can make USDT “in theory insolvent.” He added that some large holders and exchanges are likely to demand a clearer, real-time view of Tether’s reserve quality.

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

Tether had declared more than $181 billion in total assets. Much of it is in ultra-liquid securities such as Treasury bills, repo, and money-market positions.

Reports show that the firm has also expanded into higher-risk categories. This includes secured loans, venture investments, metals, and Bitcoin. S&P Global Ratings slapped the firm with a “weak” stability score earlier this month. The stablecoin issuer replied, calling S&P’s methodology outdated.

Crypto volatility cools

November has been a rough month for crypto, as nearly $1 trillion got wiped out from the market. Ethereum followed BTC to erase its major gains. ETH price dipped by more than 22% in the last 30 days. It is now down by almost 40% from its all-time high of above $4,900, recorded on August 25. Ether is trading at an average price of $3,011 at press time.

Still, there are some signs that the selling pressure is easing now. Derivatives desks say demand for protective downside hedges has cooled sharply.

Tether is also dealing with operational headaches. The company confirmed it is shutting down its mining venture in Uruguay. This came after negotiations over electricity pricing broke down. About 30 of its 38 staff in the country are being let go as the business winds down, according to reports.

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