Arthur Hayes has issued a stark warning regarding Tether’s reserve strategy following an analysis of the company’s most recent attestation report. In a recent post on X, Hayes indicated that Tether has moved beyond simply backing USDT with cash-like instruments. Instead, the company has adopted a more aggressive stance, effectively engaging in a large, leveraged macro trade that is heavily dependent on Federal Reserve policy decisions.
According to the report disclosed by Tether, the company now holds over $9.85 billion in Bitcoin and $12.9 billion in gold. This significant allocation to alternative assets represents a substantial portion of its balance sheet. Hayes posits that this strategic shift is intentional. His interpretation is that Tether anticipates the Federal Reserve will implement interest rate cuts. Such a move would substantially decrease Tether’s income derived from U.S. Treasury bills and reverse repos, which currently yield billions annually. As interest rates decline, the cost of borrowing money would fall, and assets like Bitcoin and gold are expected to appreciate in value. Tether appears to be positioning itself in anticipation of this policy pivot.
However, Hayes cautions that this strategy carries inherent risks. The inclusion of assets like Bitcoin and gold introduces volatility into what is intended to be the most stable balance sheet within the cryptocurrency space. Tether currently holds approximately $181 billion in assets backing USDT. Despite this substantial figure, its equity cushion is notably small when compared to its exposure to Bitcoin and gold. Hayes highlights that a mere 30% drawdown in these holdings – a scenario far from impossible in the volatile crypto markets – could entirely deplete Tether’s equity. In conventional financial terms, this would render the entity technically "insolvent" on paper.
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
Hayes anticipates that this risk dynamic will attract scrutiny from major cryptocurrency exchanges, market makers, and institutional investors holding USDT. These entities may begin to demand real-time transparency regarding Tether’s balance sheet. If the market perceives that Tether lacks the capacity to absorb a sudden decline in its risk assets, redemption pressure could intensify, particularly during periods of market volatility. This concern could prompt mainstream media outlets to reignite long-standing skepticism surrounding Tether’s reserves and governance. Hayes even suggests that publications already critical of Cantor Fitzgerald and Howard Lutnick, key partners supporting Tether's operations, might leverage this situation to amplify negative narratives.
Despite these concerns, it is important to acknowledge that Tether has historically maintained its peg through periods of panic and has generated substantial profits during times of high interest rates. The company’s current strategy might be a calculated risk management approach, designed to hedge against the potential impact of future rate cuts on its revenues, rather than a reckless gamble. Nevertheless, Hayes' critique underscores a fundamental structural reality: the greater Tether's reliance on volatile assets, the more exposed it becomes to the very market fluctuations that USDT is intended to shield its users from.
For the present moment, the USDT peg remains stable, liquidity is ample, and demand for USDT continues to grow. However, should Bitcoin or gold experience a sharp correction, the solvency question raised by Hayes could re-emerge as a prominent topic in market discussions. Whether this situation evolves into a genuine risk or simply another iteration of existing skepticism surrounding Tether may hinge on how the company adjusts its asset positioning in anticipation of the Federal Reserve’s next significant policy decision.