Bitcoin Updates Today: Tether’s Bitcoin Investment Compared to Stability: S&P Raises Concerns Over Unstable Peg

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Bitcoin Updates Today: Tether’s Bitcoin Investment Compared to Stability: S&P Raises Concerns Over Unstable Peg

Bitget-RWA2025/11/27 06:50

By:Bitget-RWA

- S&P Global Ratings downgraded Tether's USDT to "weak" due to 5.6% Bitcoin exposure exceeding its 3.9% overcollateralization threshold and limited reserve transparency. - Tether CEO defended the model, citing no redemption refusals and $10B 2025 net profit, while S&P warned Bitcoin/gold price drops could trigger undercollateralization risks. - Market turbulence saw $3.5B Bitcoin ETF outflows and $9.9B Bitcoin holdings, with Tether expanding into gold producers and crypto lending despite regulatory scrutin

S&P Global Ratings has assigned Tether's

USDT

stablecoin its lowest stability rating, labeling it as "weak" due to increasing concerns about the company’s investments in riskier assets such as

Bitcoin

. According to a report released on November 26,

S&P’s downgrade follows changes in Tether’s reserve makeup

, with Bitcoin now making up 5.6% of all USDT—surpassing the agency’s 3.9% overcollateralization guideline. Alongside ongoing questions about reserve transparency and exposure to gold, secured loans, and corporate bonds,

these factors have intensified doubts about USDT’s ability to consistently hold its $1 value

S&P warned that a drop in Bitcoin or other volatile assets could weaken Tether’s reserves, possibly resulting in insufficient collateral for USDT. Even though Tether holds a significant amount of U.S. Treasuries,

the agency pointed out "ongoing disclosure shortfalls" and a lack of clear asset separation

to safeguard against insolvency.

Tether

, on the other hand, has stood by its approach, with CEO Paolo Ardoino

characterizing the downgrade as a reaction from "traditional finance"

against new financial innovations. He stressed that Tether has always honored redemption requests and described the company as "the first overcapitalized entity in financial history".

Tether’s allocation to Bitcoin has increased during recent market volatility. Bitcoin itself has fallen about 30% from its 2025 peak, and

U.S. spot ETFs have experienced $3.5 billion in withdrawals

this November, adding to the downward trend. Tether’s reserves also feature $12.9 billion in gold and $9.9 billion in Bitcoin, with

Jefferies observing that Tether’s gold reserves are comparable to those of some central banks

such as South Korea and Hungary. The company has also branched out into gold mining and crypto-backed lending, including

a $25 million stake in Figure’s YLDS stablecoin

Tether’s financial position remains strong, reporting

$10 billion in net earnings

for the first three quarters of 2025, fueled by USDT’s $184 billion market value. Still, the downgrade highlights the increasing scrutiny stablecoins face as regulations lag behind. S&P indicated that Tether could earn a higher rating by reducing its exposure to risky assets and improving transparency—though such steps may conflict with its current strategy involving Bitcoin and gold.

At the same time, Tether’s reach goes beyond its stablecoin.

Its recent purchase of 1 million Rumble shares

, worth $5.75 million, has boosted the video platform’s stock by 14%. Tether’s involvement in crypto tipping and GPU acquisitions further demonstrates its growing ecosystem. Nevertheless, as S&P’s caution suggests, the tension between fostering innovation and ensuring stability remains delicate in a sector where trust can quickly disappear.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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