The post Tether usdt downgrade to Weak strains peg amid bitcoin risk appeared on BitcoinEthereumNews.com.

Investors are reassessing stablecoin risk after S&P flagged tether usdt in a stark new stability review that challenges long-held market assumptions. Why did S&P slash Tether’s stability rating to “Weak”? On November 26, S&P Global Ratings issued an update that may become the most consequential stablecoin call of the past decade. The agency cut USDT, issued by Tether, to its lowest stability score of 5, labeled “Weak.” No stablecoin anywhere near this size has ever received such a poor rating. Author and analyst Shanaka Anslem Perera argues that the data behind the downgrade should force the entire crypto market to pay attention. Moreover, the report highlights a structural shift in reserves that directly links USDT’s stability to Bitcoin‘s price path. How exposed is Tether to Bitcoin volatility? Perera frames the risk with a blunt comparison drawn from S&P’s figures. Bitcoin now represents 5.6% of Tether’s reserves, while the company’s own safety buffer sits at just 3.9%. “Read that again,” he wrote. “The volatile asset exceeds the cushion meant to absorb its fall.” S&P did not soften its language. The rating note warns that a sharp Bitcoin correction could leave USDT undercollateralized, undermining confidence in its dollar peg. For a $184B token used across centralized exchanges, DeFi protocols, and emerging markets, that is a serious warning signal for overall stablecoin market risk. Have long-time skeptics finally been vindicated? For nearly 10 years, critics have questioned whether Tether’s disclosures matched its outsized influence on crypto liquidity. Regulators raised similar doubts well before S&P’s downgrade. However, those concerns did little to slow USDT’s growth. Perera recalls that the New York Attorney General found USDT was fully backed on only 27.6% of the days examined during its investigation. In addition, the CFTC fined Tether $41M for claiming full dollar backing while holding loans and…

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Filed under: News - @ November 27, 2025 7:27 pm