A fragile equilibrium connects cryptocurrencies and global markets in unpredictable ways. A silent risk resurfaces just when everything seems stable.
There’s something that remains in the shadows, a variable that no one mentions until it becomes impossible to ignore. Yet the signs are slowly resurfacing, like cracks beneath the surface. It concerns the crypto market, of course, but not only that. Because when we talk about global liquidity, reserves, and dollars, we inevitably end up talking about the traditional economy and especially the US Treasuries. The question is as simple as it is disturbing: what are we really referring to, and why is this factor so crucial to overall financial stability?
The answer revolves around the silent heart of the crypto market, the part that almost no one pays attention to until it makes a noise. We’re talking about stablecoins, specifically USDT. What’s worrying everyone?
The S&P downgrade: a non-trivial signal
The latest development has quietly rattled many institutional investors. S&P Global has downgraded Tether to the lowest level on its scale for maintaining its peg to the dollar. A drastic assessment, implying a concrete risk of a depeg? Technically, it means the agency has limited confidence in the token’s ability to remain anchored at $1. And it’s a harsh judgment, because it directly concerns the quality of reserves and the robustness of the redemption mechanism.
CEO Paolo Ardoino responded bluntly:
"They don’t know what they’re talking about; they’re attacking us because we’re a nuisance."
According to Tether, S&P’s model overlooks the company’s new products and, above all, the amount of additional liquidity generated over the past year. However, this is not a matter of public debate. The technical issue lies in the structural nature of USDT and how it interconnects with the traditional financial system.
The risk also flagged by the ECB
It’s not just S&P taking action. The ECB has publicly warned about the systemic role of stablecoins, highlighting how they may pose a risk to global financial stability. The reason is simple and worrying: these “quasi-currencies” are heavily exposed to US government securities and, indirectly, to the banking system.
The reserves of Tether and Circle are no mystery. Each USDT token is issued only when someone transfers actual dollars to the company. In return, they receive tokens. Tether uses those dollars to purchase reserve assets, mostly short-term US Treasuries, considered safe and highly liquid. So far, so good. The problem emerges when we imagine a scenario of mass redemptions.
The (virtual) bank run and contagion
If a virtual bank run were triggered—the crypto equivalent of a classic bank run—users would return to Tether demanding redemption of their USDT. Tether would then be forced to sell part of its reserves to obtain dollars to return. And here lies the real crux:
Tether and Circle together account for more than 90% of all stablecoins in circulation.
This is an almost monopolistic concentration. It means that if the largest liquidity provider in the crypto market came under pressure, the volume of Treasuries sold into the market could be significant. Forced sales in a stressed environment would put downward pressure on bond prices, pushing yields higher and deepening distortions along the yield curve. At a time when the Treasury market is already fragile due to rate hikes, fiscal deficits, and geopolitical tensions, a sudden shock could amplify existing vulnerabilities.
And the paradox is that such an event would simultaneously damage both traditional finance and the crypto market.
The Role of Bitcoin and Gold: An Underestimated Variable
However, there is a detail fuelling tension—not so much concerning the stability of the peg, but rather overall crypto-market sentiment. Tether has begun accumulating substantial quantities of gold, far larger than the industry expected. This raises an uncomfortable question: why would the world’s largest stablecoin issuer, operating at the core of digital finance, feel the need to purchase physical gold instead of increasing its exposure to Bitcoin?
If Bitcoin truly represents the store of value of the future, as often claimed in crypto circles, why does Tether privilege a traditional safe-haven asset like gold? The market has not welcomed this move. For many traders, it was an implicit signal: the leadership behind the industry’s most powerful stablecoin may not have the same unwavering faith in Bitcoin that the crypto community takes for granted.
Yet, paradoxically, this dynamic does not threaten the USDT peg. The reason is simple: both gold and Bitcoin purchases appear—and I emphasize appear—to be funded through Tether’s operational profits, not through the reserves backing the token. These positions therefore do not constitute a risk to the 1:1 backing and do not impair the company’s immediate ability to honor redemptions.
The real sensitive issue does not lie in “speculative” allocations, but in US Treasuries.
The market is focused on the gold-versus-Bitcoin narrative, but systemic risk lies elsewhere: in the share of reserves invested in US government securities, which represents the predominant backing asset. Treasuries have incurred significant unrealized losses since 2022 due to rising yields and aggressive monetary tightening. At book value, the problem remains hidden. But in a stress scenario, with sudden demand for dollar liquidity, Tether would be forced to liquidate part of these holdings.
It’s risk management
This scenario is not inevitable. It is not a catastrophic warning, and it does not suggest fleeing the crypto market. Rather, it highlights a systemic dynamic rarely discussed because it is complex, technical, and unsuitable for sensational headlines. But it is real.
The stability of USDT is crucial because USDT underpins the psychological stability of the crypto market. And the stability of its reserves is critical because those reserves are embedded in the vast US Treasury ecosystem.
We don’t need FOMO, and we don’t need panic. We need awareness. Because markets don’t implode due to a visible crisis, but because of a hidden variable that everyone ignores—until it becomes impossible to ignore.
Original article published on Money.it Italy 2025-12-02 11:06:26. Original title: Criptovalute, c’è un rischio (nascosto) che potrebbe far saltare tutto
