BitMEX co-founder Arthur Hayes said that the world’s largest stablecoin issuer, Tether, is preparing for a Federal Reserve rate‑cut cycle. He is concerned that as Tether increases its exposure to Bitcoin and gold, it also increases the chance that a sharp pullback in those assets could weaken its equity cushion. While Hayes called this a massive risk, the broader crypto market argues that Tether is far more financially strong than it is perceived to be. Hayes Sounds the Alarm Hayes said that Tether’s la ...

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.A roughly 30% decline in the gold + $BTC position would wipe out their equity, and then USDT would be in theory insolvent. I'm sure some large holders and exchanges will demand a real-time view of their B/S so they can assess the solv ...

Core Viewpoint - The company maintains a solid balance sheet despite recent challenges, including a significant drop in Bitcoin prices and exclusion from major indices like the S&P 500 and MSCI [1][5][6] Financial Health - The company holds 649,870 BTC valued at approximately $56 billion, significantly exceeding its debt obligations [1] - At a Bitcoin price of $74,000, the company's holdings cover its $8.214 billion in convertible notes by 5.9 times [2] - Even at a lower Bitcoin price of $25,000, the coverage ratio remains at 2 times, indicating manageable repayment risk [3] - Total obligations, including various preferred stock series, amount to about $15.993 billion, with BTC coverage multiples ranging from 56× to 7× depending on maturity [4] Market Position and Challenges - The company is at risk of exclusion from MSCI indices due to its high crypto asset concentration, which could lead to an unwinding of up to $8.8 billion in index-linked funds [5] - The recent failure to be included in the S&P 500 has raised concerns, with allegations that financial institutions may be hindering the growth of Bitcoin-heavy firms [6] Operational Adjustments - The company has paused its weekly Bitcoin purchases, breaking a six-week streak, amid concerns over cash reserves and preferred dividend obligations [7]