@changqing78

At first, Tether only allocated a small portion of its reserves (around 5%) to Bitcoin and gold, planning to offset any risk with one year of interest income if needed. Unexpectedly, both BTC and gold surged, pushing the allocation ratio above 10%. With unrealized gains included, the reserve ratio may have once exceeded 110%. At some point, seeing large paper profits, Tether paid out part of the gains as fiat dividends, bringing the reserve ratio down to about 104%. In theory, after the payout they should’ve rebalanced BTC and gold back to ~5%. But they didn’t — staying bullish instead — which pushed the ratio even higher, now around 12.5%. Honestly, either keeping a 110%+ reserve without dividends, or rebalancing back to under 5% after payouts, wouldn’t have caused this level of FUD. But they did neither. Anyway, using reserves directly for active trading is still questionable.

0 reply

1 recast

8 reactions