Arthur Hayes: A 30% drop in Tether's gold and BTC positions would render it insolvent.
TL;DR
Arthur Hayes claims Tether's large gold and BTC investments could lead to insolvency if these assets drop 30%, wiping out equity. He expects media hype and scrutiny from major holders over solvency risks.
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On November 30th, BitMEX co-founder Arthur Hayes posted that the Tether team is in the early stages of a large-scale interest rate trade. His interpretation of Tether's reserve audit report is that they believe the Federal Reserve will cut interest rates, which will severely impact their interest income. In response, Tether is buying gold and BTC, and theoretically, these assets should surge when currency prices (interest rates) fall. A roughly 30% drop in the "gold + BTC position" would wipe out their equity capital, and then USDT would theoretically become insolvent. He believes some large holders and trading platforms will demand to see Tether's balance sheet in real-time to assess the solvency risk. Grab your popcorn, because the mainstream media is expected to hype this up, especially editors suffering from "Trump Rage Syndrome" (TDS), who want to use this opportunity to attack Lutnick and Cantor (referring to Commerce Secretary Howard Lutnick and his financial services company Cantor Fitzgerald, major supporters and partners of Tether).