Related Articles
Tether’s USDT just got slapped with a “weak” stability rating from S&P Global, down from “constrained,” all thanks to its growing Bitcoin habit. The news ignited a firestorm across Chinese social media, where traders are now battling a potent cocktail of skepticism and outright fear. Is this the beginning of the end for USDT’s reign as the king of stablecoins?
Beneath the surface of China’s digital landscape, a clandestine crypto market thrives, defying the nation’s 2021 ban. For over 20 million participants, USDT remains the lifeblood, the crucial artery pumping liquidity into their digital asset trades, a silent rebellion fueled by decentralized finance.
S&P Flags Reserve Composition Concerns
Tether’s foundation is wobbling, according to a new S&P Global report. Forget a safety net – Bitcoin now props up 5.6% of all circulating USDT, blowing past Tether’s claimed 3.9% buffer. Is this a crypto house of cards? S&P’s verdict: Tether’s reserve strategy is shrouded in secrecy, leaving investors in the dark.
Tether’s Q1-Q3 2025 reports reveal a treasure chest: $9.9 billion in Bitcoin glitters alongside a $12.9 billion hoard of gold. These bold bets, while volatile, make up roughly 13% of the reserves backing $174.4 billion in liabilities. But fear not, Tether’s coffers overflow with $181.2 billion, fueled by over $10 billion in profit in just nine months, showcasing a Midas touch in the digital age.
S&P’s deep dive into Tether’s reserves revealed a portfolio peppered with high-risk investments: secured loans, corporate bonds, and even precious metals. This cocktail of assets, coupled with persistent transparency loopholes, casts a shadow of doubt on USDT’s long-term dollar peg. Yet, a glimmer of reassurance appears in Tether’s own transparency reports, showcasing a hefty $113 billion war chest of US Treasury holdings, forming the lion’s share of their reserves. It’s a high-stakes balancing act between risk and stability for the world’s leading stablecoin.
Chinese Traders React With Mixed Emotions
A digital tremor rippled through China’s crypto landscape, ignited by the USDT downgrade. Yet, in a market where Tether reigns supreme, battle lines were quickly drawn. One grizzled trading veteran scoffed at the news, dismissing it as another false alarm, surfacing, as always, conveniently close to rock bottom. The prevailing sentiment? Stability warnings are like crying wolf – heard too many times to still bite.
Beyond the immediate headlines, a deeper unease simmers: the potential repercussions. The knot in everyone’s stomach? USDT’s linchpin status within China’s vibrant, yet underground, stablecoin ecosystem. Think of it as the digital lifeblood of a clandestine financial world. Numerous exchanges, though locally managed, cater to Chinese users, forging unbreakable bonds between traders and the USDT-fueled markets they depend on. This intricate web raises the stakes considerably.
“If this bomb goes off, the cryptocurrency market is completely finished!” Source: Weibo
As Tether (USDT) wobbled, whispers of sabotage slithered through the crypto world. Was this a coordinated takedown orchestrated by rivals like USDC and USD1? The theory gained traction, fueled by the fact that dethroning USDT could be a lucrative power grab, especially with regulators circling. Critics seized the moment, touting USDC as the stablecoin heir apparent, a beacon of transparency and compliance in a murky market.
Underground Market Faces Stability Test
China outlawed crypto in 2021, slamming the door shut on Bitcoin and its digital brethren. But rumors of crypto’s demise in the Middle Kingdom have been greatly exaggerated. Defying the dragon’s decree, over 20 million Chinese citizens are estimated to be HODLing Bitcoin in 2024. They’re navigating the ban with cunning: using offshore exchanges, discreet over-the-counter deals, and shadowy private transactions to keep their crypto dreams alive.
USDT: the digital thread weaving through China’s crypto underground. Yuan flows into dollar-pegged tokens via hushed backchannels, a lifeline for investors navigating a regulatory maze. Glimmers of crypto-curiosity flicker across Weibo and WeChat; exchange groups mushroom, fueled by whispers and shared ambition. Guiding this shadow economy? Influencers and “signal teachers,” gurus navigating the gray areas, leading followers toward forbidden fortunes.
The S&P downgrade sent tremors through Chinese crypto circles – and here’s why: Imagine a Jenga tower built on USDT. Any wobble in its foundation, and the whole thing collapses. Without formal regulations or safety nets, a USDT disruption could unleash a catastrophic domino effect, leaving traders exposed to risks as wild and unpredictable as a Sichuan fire dragon.
The post China’s Crypto Traders Panic as S&P Downgrades Tether’s USDT appeared first on BeInCrypto.
Thanks for reading China’s Crypto Traders Panic as S&P Downgrades Tether’s USDT
