A 30% drop in Bitcoin could make Tether ‘insolvent,’ warns Arthur Hayes

Tether’s USDT stability downgrade by S&P Global Ratings continues to elicit different views across the crypto community.
The stablecoin got a negative ‘weak’ rating, with S&P Global citing rising exposure to ‘high risk’ assets like Bitcoin and gold. 
In response to the report, BitMEX founder Arthur Hayes stated that Tether increased its exposure to BTC and gold to front-run the typical rally associated with dropping Fed interest rates. However, he cautioned, 
“A roughly 30% decline in the gold + $BTC position would wipe out their equity, and then USDT would be, in theory, insolvent.”
Source: Tether
According to the Q3 report shared by Tether, but not independently verified by third parties, the firm’s USDT was backed by $139 billion in cash and cash equivalents.
The remaining backing was dominated by ‘illiquid’ assets, including gold, BTC, loans, and other instruments. 
Mixed views on perceived Tether risks
Some analysts supported Hayes’ warning. On his part, Ryan Berckmans, an Ethereum community member, said, 
“Why are ~$40B in USDT backed by assets riskier than cash and cash equivalents? When my stablecoin operator keeps all the yield, I at least want them to be fully backed by risk-minimized reserves.”
Per Tether’s transparency report as of Q3, it had $174 billion in liabilities for USDT.
Compared to about $140B in cash and cash equivalents, it meant that in a liquidity run and widespread instant redemption, Tether would be short by $34B. 
For Akash Network founder Greg Osuri, the disparity with cash assets was a ‘ticking time bomb’ for USDT. 
Source: X
Tether’s BTC hit $8B
Put differently, Tether was solvent paper, its $181 billion assets surpassed its $174 billion in liabilities. But it was not fully liquid and operated like a fractional reserve design used by traditional banks. 
But others disagreed with Hayes’ take. For example, Mr. Anderson, countered the 30% decline and added, 
“A mark-to-market dip isn’t insolvency. Insolvency means assets < liabilities, and even after a 30% hit, they’re roughly at parity. The real risk with any stablecoin is liquidity during a run, not “BTC dropped 30%, therefore Tether died.” Joseph Ayoub, a former crypto research lead at Citibank, also debunked Hayes’ warning and highlighted,  “Tether isn’t going insolvent, quite the opposite; they own a money printing machine.” As of 2025, Tether was amongst the top BTC holders, with 87.2K BTC worth about $8 billion at current prices. It has also doubled down on gold and became the top buyer in Q3.  Source: Arkham Final Thoughts  Analysts were divided on the underlying stability risk of Tether’s USDT based on its self-reported reserve backing assets.  Tether doubled down on BTC and gold as reserve assets in 2025, increasing its stash to 87K BTC. Next: PIPPIN rallies 345% from the weekly lows – Should you buy it now?