Tether, the issuer of USDT, has long been considered one of the most stable assets in the crypto market, but a recent report suggests that a crash in the Bitcoin price could jeopardize the stablecoin’s solvency. Arthur Hayes, co-founder and CIO of BitMEX, has revealed that a portion of USDT’s reserves is allocated to BTC, potentially exposing it to heightened market volatility. 

Bitcoin Price Crash To Threaten Tether USDT Stability 

In a recent report shared on X earlier this week, Hayes outlined market risks that could have a devastating impact on Tether’s USDT. The BitMEX founder explained that the stablecoin issuer has been executing a large-scale interest rate trade, likely betting on a Federal Reserve (FED) rate cut. 

He stated that the stablecoin issuer has accumulated significant positions in Bitcoin and gold to hedge against falling interest income. As a result, Hayes has warned that if Tether’s positions in both gold and Bitcoin were to decline by roughly 30%, it could wipe out its entire equity, theoretically putting USDT at risk of insolvency. 

Since stablecoins are typically backed by the US dollar, the crypto founder has stated that a severe drop in Tether’s reserve value could trigger panic amongst USDT holders and crypto exchanges. In such a scenario, they might demand immediate insight into the stablecoin issuer’s balance sheet to gauge solvency risk. Hayes has also suggested that the mainstream media could further amplify the concerns, creating widespread market alarm.  

Analyst Fires Back Against Hayes’ USDT Claims

Following Hayes’ statements on X, Tether’s USDT has come under scrutiny, with crypto analysts debating the resilience of its reserves. A former Citi Research lead, Joseph Ayoub, challenged Hayes’ claims, arguing that even if Bitcoin and gold prices were to crash 30%, a USDT insolvency remains highly unlikely. 

He highlighted that the BitMEX co-founder had missed three key points in his post. Ayoub noted that Tether’s publicly disclosed assets do not represent the entirety of its corporate holdings. According to him, when Tether issues USDT, it maintains a separate equity balance sheet that is not publicly reported. The reserve numbers that are eventually disclosed are intended to show how USDT is backed. At the same time, the company maintains a balance sheet for equity investments, mining operations, corporate reserves, possibly more Bitcoin, and the rest distributed as dividends to shareholders.

Ayoub also described Tether’s core operations as highly profitable and efficient. He stated that the company holds over $100 billion in interest-yielding treasuries, generating roughly $10 billion in liquid profit annually while operating a relatively small team. The former Citi research lead estimated that the stablecoin issuer’s equity is likely valued at between $50 billion and $100 billion, providing it with a substantial cushion against losses in its crypto and gold holdings. 

Finally, Ayoub disclosed that Tether operates like traditional banks, maintaining only 5-10% of deposits in liquid assets, while the remaining 85% are held in longer-term investments. He also noted that the stablecoin issuer is significantly better collateralized than banks, adding that with their ability to print money, bankruptcy is virtually impossible.

Tether’s latest Q3 2025 attestation reveals the stablecoin giant now holds approximately $22.8 billion in gold and Bitcoin, a diversification strategy that BitMEX founder Arthur Hayes warns could trigger USDT’s collapse.

CEO Paolo Ardoino announced the company maintains “a multi-billion-dollar excess reserve buffer and an overall proprietary Group equity approaching $30 billion,” but Hayes argues this diversification masks dangerous exposure to volatile assets.

Hayes contends Tether is positioning for Federal Reserve rate cuts that would crush their Treasury income.

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

“The Tether folks are in the early innings of running a massive interest rate trade,” Hayes wrote, adding that “a roughly 30% decline in the gold + BTC position would wipe out their equity, and then USDT would be in theory insolvent.”

Analyst Paul Barron noted that for every 25 basis point Fed decrease, USDT’s annual interest income drops approximately $318 million based on its $127 billion Treasury exposure.

Tether CEO Fires Back with Detailed Financial Disclosures

In a recent X Post, Ardoino swiftly countered Hayes’s insolvency claims with comprehensive data.

“Tether had (at end of Q3 2025) ~7B in excess equity (on top of the ~184.5B stablecoin reserves) + another ~23B in retained earnings as part of our Tether Group equity,” the CEO explained.

re: Tether FUD

From latest attestation announcement (Q3 2025):

"Tether will continue to maintain a multi-billion-dollar excess reserve buffer and an overall proprietary Group equity approaching $30 billion."

Tether had (at end of Q3 2025) ~7B in excess equity (on top of the…

— Paolo Ardoino (@paoloardoino) November 30, 2025

Tether Group’s total assets reach approximately $215 billion against $184.5 billion in stablecoin liabilities, with gold and Bitcoin representing just 12.6% of reserves.

The CEO accused critics of deliberately misrepresenting Tether’s position.

“S&P made the same mistake of not considering the additional Group Equity nor the ~500M in monthly base profits generated by U.S Treasury yields alone,” Ardoino stated, suggesting “some influencers are either bad at math or have the incentive to push our competitors.”

His defense comes after S&P Global downgraded USDT’s peg-stability rating from 4 to 5 on November 26, citing increased exposure to “high-risk“ assets and “persistent gaps in disclosure.“

Industry Veterans Dismantle Tether’s Insolvency Claims

Joseph Ayoub, former head of digital asset research at Citi, noted that Tether’s disclosed assets don’t represent all corporate holdings.

“Their disclosed assets =/ all corporate assets,” he explained, noting Tether maintains a separate equity balance sheet comprising mining operations and corporate reserves that aren’t publicly reported.

I spent 100’s of hours writing research on tether for @Citi. @CryptoHayes missed a few key points.

1) 𝐓𝐡𝐞𝐢𝐫 𝐝𝐢𝐬𝐜𝐥𝐨𝐬𝐞𝐝 𝐚𝐬𝐬𝐞𝐭𝐬 =/ 𝐚𝐥𝐥 𝐜𝐨𝐫𝐩𝐨𝐫𝐚𝐭𝐞 𝐚𝐬𝐬𝐞𝐭𝐬

When tether generates $ they have a separate equity balance sheet which they don’t… https://t.co/pHSRr245Up

— Joseph (@JosephA140) November 30, 2025

With roughly $120 billion in interest-yielding Treasuries generating approximately 4% returns since 2023, Tether produces around $10 billion in liquid profit annually with just 150 employees.

Ayoub noted that banks operate on significantly lower fractional reserves of 5-15% in liquid assets compared to Tether’s overcollateralized structure.

His conclusion, “Tether isn’t going insolvent, quite the opposite; they own a money printing machine.“

S&P Downgrade Sparks Fierce Industry Backlash

Ardoino responded defiantly to S&P’s rating action and recurrent criticism of Tether’s operational model.

“We wear your loathing with pride,” the CEO declared, positioning Tether as “the first overcapitalized company in the financial industry, with no toxic reserves” that proves “the traditional financial system is so broken that it’s becoming feared by the emperors with no clothes.”

He challenged banks to publish their reserve ratios, suggesting they likely consist of “3 olives and a half chewed gum.“

Rumble CEO Chris Pavlovski added that “The S&P only attacks Tether, because Tether is challenging and beating the old financial guard at their own game.”

The S&P only attacks Tether, because Tether is challenging and beating the old financial guard at their own game.

These old corporate entities cannot handle companies like Tether & Rumble taking their market share — their only recourse is to attack us because they’re losing. https://t.co/UUbaYpXAUq

— Chris Pavlovski (@chrispavlovski) November 26, 2025

The attacks surprised many, considering USDT maintained its peg through the 2018 crash, 2022 Terra/Luna collapse, and 2023 banking crisis.

Yet the downgrade carries serious implications.

With a “5” rating and MiCA regulations prohibiting USDT from EU exchanges, no major institutional fund can legally hold the stablecoin.

This could favor competitors like Circle’s USDC, PayPal’s PYUSD, or tokenized fiat alternatives, potentially shifting liquidity away from a company that generated more net profit than BlackRock last year and is tipped to surpass Saudi Aramco in profitability.

The post BitMEX Founder Warns Tether’s Bitcoin Bet Could Trigger USDT Collapse appeared first on Cryptonews.

The Layer 1 blockchain Monad has grabbed the headlines in the past few days following its successful launch earlier last week. MON, its native token, enjoyed a significant 80% surge on the back of the launch, hitting an all-time high of 0.048 on Wednesday, November 26.

While the Monad protocol has enjoyed significant attention since going live, it appears that not everyone is confident in its potential adoption. Most notably, BitMEX co-founder Arthur Hayes has put forward a pessimistic outlook for the project, saying its token value could fall as much as 99%.

Monad Has No Real Use Case: Hayes

In a YouTube interview with Altcoin Daily, Hayes stated that any other Layer 1 blockchain besides Ethereum and Solana is “zero” and is not going to do very well. Using Monad as an example, the former BitMEX CEO described the protocol’s coin as another “high FDV, low-float” token.

Hayes said that Monad is going to be the new “Berachain” and expects its native token’s value to fall by 99% after the initial jump. Berachain, which launched in February 2025, has its native token BERA trading beneath $1, nearly 94% beneath its all-time high of $14.83.

As of this writing, the Monad token is valued at around $0.0285, reflecting an over 40% decline since hitting its all-time high on Wednesday.

Hayes highlighted that every new project’s token often enjoys an early price spike before facing a deep correction, as there is usually no real use case to back up the initial growth. The crypto founder noted that it is a classic case of FOMO (fear of missing out), especially after the massive success of Ethereum.

Hayes said in the interview:

Every coin gets their first pump and people want to believe in the new L1. Everybody wants to invest in the new Ethereum like they would have in 2014 when everyone missed it. Me included. But again, that doesn’t mean it [Monad] is going to actually have any real use case.

Moving forward, Hayes went on to pick a “magnificent five” of protocols currently in the cryptocurrency space, including Bitcoin, Ethereum, Solana, ZCash, and Ethena.

If Not Layer 1s, What Next?

It is little surprise that ZCash made it to the BitMEX co-founder’s list of top blockchain protocols. According to Hayes, ZCash and other privacy-focused coins—like Monero—will dominate the crypto narrative even more in the coming year.

Additionally, Hayes mentioned that Zero Knowledge (ZK) proofs and quantum resistance are other crypto narratives to watch out for in 2026. Specifically, the crypto founder noted that the next winner in the crypto market over the next one to two years would come from the ZK space.

Arthur Hayes believes Bitcoin’s October flush to $80,000 marked the end of a liquidity-driven reset, not the start of a new bear market – and that the structural forces that pushed BTC down are now reversing.

$80,000 Was The Bottom As Dollar Liquidity Turns

In a Milk Road Show episode recorded November 26 and released November 27, the BitMEX co-founder argued that the much-celebrated US spot ETF “institutional bid” was largely a leveraged basis trade that has now run its course at the same time as US dollar liquidity appears to have bottomed.

“And so that’s why I believe that the $80,000 dip on Bitcoin recently is the bottom,” Hayes said. “And now we’re going to have a supportive liquidity situation, at least marginally on the dollar, and we’re bottom here and can go higher.”

Hayes is still openly targeting a blow-off move into the $200,000–$250,000 range by year-end, repeating the call from his recent “Snow Forecast” essay. “I’m going to stick with it,” he said. “If I’m wrong it doesn’t matter. I’m long, right? I’m still happy either way. It’s either $200k–$250k or not.”

At the time of recording, the host noted Bitcoin was “back above $90K.” Hayes said ETF flow charts that dominated crypto social media in the spring and summer badly misled retail. He pointed to the largest holders of BlackRock’s iShares Bitcoin Trust (IBIT) – Brevan Howard, Goldman Sachs, Millennium, Avenue, Jane Street – as evidence that the dominant players were not long-only allocators.

“These entities are not places where they’re just going to go long Bitcoin,” he said. Instead, they were running a standard basis trade: buying IBIT, pledging it as collateral and shorting CME futures. “They were making, let’s call it 7 to 10% per annum on that trade. They fund Fed funds at four-ish percent and they lever it up.”

When the futures basis collapsed following the October 10 liquidation cascade, that trade had to be unwound by selling the ETF and covering futures shorts, flipping net ETF flows from strong inflows to outflows. Retail investors misread that as “institutions turning bearish.”

“Retail thinks, ‘Oh no, institutions loved Bitcoin in the summer and now they hate it in the fall, therefore I need to get rid of my exposure as well,’ not understanding what was driving those flows in the first place,” Hayes said.

He paired this with a second temporary pillar: listed digital asset treasury (DAT) companies that issue stock or debt to buy Bitcoin. Once those vehicles traded at net asset value or a discount, new issuance became uneconomic and in some cases incentivized selling BTC to buy back shares, removing another marginal buyer.

Macro Conditions Are The Key Catalyst

Against that micro backdrop, Hayes situates a much larger macro shift. He tracks a proprietary US dollar liquidity index built from Fed balance sheet series and commercial bank data. In his telling, roughly a trillion dollars of liquidity was drained from dollar money markets from July onward due to Treasury General Account (TGA) refilling and Federal Reserve quantitative tightening.

In 2023, then-Treasury Secretary Janet Yellen could offset that drain by issuing huge amounts of high-yielding T-bills that pulled about $2.5 trillion out of the Fed’s reverse repo facility back into the system. In 2025, he argues, Treasury Secretary Scott Bessent had no such reservoir to tap.

Now, Hayes says, both the TGA rebuild and QT have effectively run their course. The TGA has been restored to its target zone, and the Fed has halted balance sheet runoff.

“We have essentially bottomed on the liquidity chart and the direction in the future is higher,” he said, adding that markets are still waiting to see how the Trump administration actually delivers on promises of massive credit creation via industrial policy, bank lending and a more dovish Fed. He expects the next leg of liquidity to come more from commercial banks than the central bank, citing early signs of rising bank lending and public commitments from institutions like JPMorgan to finance large industrial programs.

Hayes was equally direct on the October 10 wipeout, calling it a harsh lesson for underprepared leveraged traders rather than a coordinated hunt. “People think that I’m going to get off of work and trade leveraged crypto for a few hours and I’m going to somehow make money. No, you’re going to get liquidated,” he said. “If you are a proper trader, you should not get liquidated. Period.”

On positioning, Hayes said he used the post-crash environment to buy what he considers fundamentally strong altcoins like Pendle, Ethena and EtherFi at levels last seen months earlier. He expects those to outperform ETH in the short term but still backs the long-term “institutional DeFi” narrative that could take Ethereum to “the $10,000 to $20,000 price by the end of the cycle.”

For now, his core thesis is simple: the ETF basis trade is largely gone, the liquidity drain is over, leverage has been flushed – and the macro tide, in his view, is turning back in Bitcoin’s favour.

At press time, BTC traded at $91,004.

Arthur Hayes predicts equity price discovery will migrate to 24/7 crypto perpetuals, pressuring traditional exchanges as regulation turns more crypto-friendly. BitMEX co-founder Arthur Hayes has predicted that crypto-style perpetual futures will displace traditional stock exchanges, stating that equity price discovery…