Bitcoin News Today: Tether's Bitcoin Bet vs. Stability: S&P Sounds Alarm on Fragile Peg

Tether's USDT stablecoin has been downgraded to "weak" by S&P Global Ratings, marking the lowest possible score on the agency's stability scale, as concerns mount over its exposure to high-risk assets like Bitcoin. The downgrade, detailed in a November 26 report, reflects a shift in Tether's reserve composition, with Bitcoin now accounting for 5.6% of USDT in circulation—exceeding S&P's 3.9% overcollateralization threshold. This, coupled with limited transparency on reserve management and risks from gold, secured loans, and corporate bonds, has raised alarms about the stablecoin's ability to maintain its $1 peg.

S&P highlighted that a decline in Bitcoin's value or other high-risk assets could reduce reserve coverage, potentially leaving USDT undercollateralized. Despite holding safer assets like U.S. Treasuries, the agency noted "persistent gaps in disclosure" and insufficient asset segregation to protect against insolvency. Tether, however, has defended its model, with CEO Paolo Ardoino dismissing the downgrade as part of "traditional finance's" resistance to innovation. He emphasized that Tether has never refused a redemption request and positioned the firm as "the first overcapitalized entity in financial history".

The stablecoin's exposure to Bitcoin has grown amid a turbulent market. Bitcoin, down roughly 30% from its 2025 highs, has seen $3.5 billion in outflows from U.S. spot ETFs this November, exacerbating downward pressure. Tether's reserves also include $12.9 billion in gold and $9.9 billion in Bitcoin, with Jefferies noting its gold holdings rival those of central banks like South Korea and Hungary. The firm has further diversified into gold producers and crypto-backed lending, including a $25 million investment in Figure's YLDS stablecoin.

Tether's financials remain robust, with reported $10 billion in net profit for the first nine months of 2025, driven by USDT's $184 billion market cap. However, the downgrade underscores growing scrutiny of stablecoins as regulatory frameworks lag. S&P suggested Tether could improve its rating by reducing high-risk assets and enhancing transparency—a move that might not align with its strategic bets on Bitcoin and gold.

Meanwhile, Tether's broader influence extends beyond its stablecoin. Its recent acquisition of 1 million Rumble shares, valued at $5.75 million, has propelled the video platform's stock up 14%, while its partnerships in crypto tipping and GPU procurement highlight its expanding ecosystem. Yet, as S&P's warning signals, the balance between innovation and stability remains precarious in a market where confidence can evaporate quickly.