Bitget App
Trade smarter
Buy cryptoMarketsTradeFuturesEarnSquareMore
China’s Crypto Traders Panic as S&P Downgrades Tether’s USDT

China’s Crypto Traders Panic as S&P Downgrades Tether’s USDT

BeInCryptoBeInCrypto2025/11/26 18:34
By:Oihyun Kim

S&P Global Ratings downgraded Tether’s USDT stablecoin stability score from constrained to weak, citing increased exposure to volatile assets like Bitcoin. This move triggered intense debate on Chinese social media, with traders expressing concerns ranging from skepticism to outright panic. The timing is critical for China’s underground crypto market. Over 20 million participants depend on

S&P Global Ratings downgraded Tether’s USDT stablecoin stability score from constrained to weak, citing increased exposure to volatile assets like Bitcoin. This move triggered intense debate on Chinese social media, with traders expressing concerns ranging from skepticism to outright panic.

The timing is critical for China’s underground crypto market. Over 20 million participants depend on USDT as their primary route to digital asset trading, even after the country’s 2021 ban.

S&P Flags Reserve Composition Concerns

The official S&P Global report released on Wednesday highlights significant risks in Tether’s reserve structure. Bitcoin now makes up 5.6% of circulating USDT, exceeding the previously stated buffer of 3.9%. S&P pointed to insufficient transparency and limited disclosure of reserve assets.

According to Tether’s Q1–Q3 2025 attestation reports, the company holds $9.9 billion in Bitcoin and $12.9 billion in gold. Combined, these volatile assets account for about 13% of total reserves backing $174.4 billion in liabilities. Tether maintains $181.2 billion in reserves and has generated over $10 billion in profit in the first three quarters of 2025.

S&P’s analysis also highlighted exposure to high-risk assets, such as secured loans, corporate bonds, and precious metals. The agency noted ongoing gaps in disclosure practices, raising doubts about USDT’s long-term ability to keep its 1-to-1 peg with the US dollar. However, Tether’s transparency reports show US Treasury holdings of more than $113 billion, accounting for most of its reserves.

Chinese Traders React With Mixed Emotions

The downgrade sparked a heated debate within Chinese crypto circles, where USDT dominates trading. One veteran trader noted that negative news about Tether regularly surfaces without effect, often near market lows. This view shows how many remain skeptical of stability warnings that have not come true in the past.

Other participants expressed concern about the potential fallout. The anxiety centers around USDT’s key role as vital infrastructure for China’s thriving but banned stablecoin crypto community. Many exchanges serving Chinese users operate under local management, creating deep ties between traders and USDT-denominated markets.

China’s Crypto Traders Panic as S&P Downgrades Tether’s USDT image 0“If this bomb goes off, the cryptocurrency market is completely finished!” Source: Weibo

Meanwhile, conspiracy theories emerged about coordinated attacks by stablecoin rivals USDC and USD1. Some analysts argued that these competitors have much to gain from undermining USDT’s dominance, particularly as global regulatory scrutiny intensifies. Critics took the opportunity to promote USDC as the future of stablecoins, citing stronger transparency and regulatory compliance.

Underground Market Faces Stability Test

China began comprehensive cryptocurrency bans in 2017, culminating in 2021 with the outlawing of all crypto transactions and mining. Yet, data shows more than 20 million Chinese citizens hold Bitcoin as of 2024. Traders use overseas exchanges, over-the-counter platforms, and private deals to bypass local restrictions.

USDT emerged as a lifeline for this shadow market, enabling Chinese investors to convert yuan into dollar-linked tokens through informal channels. Social media sites like Weibo and WeChat show continuous interest in Bitcoin and crypto trading, with rapid growth in some exchange communities. This network relies on influencers and so-called “signal teachers” to guide users through regulatory barriers.

This activity’s scale explains why the S&P downgrade resonated so strongly in Chinese crypto communities. Any disruption to USDT could trigger a chain reaction across an ecosystem with no official recourse. Traders face higher risks due to the informal and unregulated nature of their markets.

0

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

PoolX: Earn new token airdrops
Lock your assets and earn 10%+ APR
Lock now!

You may also like

Uruguay’s Energy Challenges Disrupt Tether’s $500 Million Cryptocurrency Investment

- Tether abruptly ended its $500M Uruguay Bitcoin mining project due to unsustainable energy costs and uncompetitive tariffs. - The project, initially promoted as eco-friendly, faced $4.8M in unpaid bills and regulatory challenges. - The exit highlights risks for crypto miners in regions with volatile energy markets and uncertain policies. - Tether remains interested in Latin American green energy projects despite the Uruguay setback.

Bitget-RWA2025/11/29 00:08
Uruguay’s Energy Challenges Disrupt Tether’s $500 Million Cryptocurrency Investment

Solana News Update: Solana Experiences Sharp Price Drop, Yet Institutional Investments Reflect Confidence in Its Future

- A $239M whale transfer on Solana by Forward Industries to Fireblocks Custody highlights institutional confidence amid SOL's 53% price drop since January 2025. - Upexi's $23M private placement and 40% stock decline underscore crypto exposure risks as institutional Solana ETF inflows hit $420M in November. - CME's Dec 15 SOL/XRP futures launch and Fidelity's staking ETFs signal growing institutional adoption despite Solana's $77.4B market cap decline. - Whale activity and ETF trends suggest strategic long-

Bitget-RWA2025/11/29 00:08
Solana News Update: Solana Experiences Sharp Price Drop, Yet Institutional Investments Reflect Confidence in Its Future

Bitcoin Updates Today: U.S. Bitcoin Holdings: Advancement or Threat in the International Crypto Competition?

- U.S. Rep. Warren Davidson proposes Bitcoin tax payments and a Strategic Bitcoin Reserve to modernize tax collection and hedge against inflation. - The UK tightens crypto tax rules, aligning with global efforts to regulate digital assets amid volatility, fraud, and tax evasion concerns. - Critics warn BTC's volatility risks reserve stability, while compliance costs and environmental impacts challenge adoption despite potential $230B reserve growth by 2030. - The bill mandates KYC data for transactions and

Bitget-RWA2025/11/28 23:52

Harley-Davidson's 33 consecutive years of dividends demonstrate strong trust from investors

- Harley-Davidson declared a $0.18/share Q4 2025 dividend, extending its 33-year uninterrupted payout streak and signaling strong investor confidence in its financial stability. - Q3 2025 results showed EPS of $3.10 (double estimates) and $1.34B revenue (surpassing $1.01B forecasts), alongside strategic debt repurchases to optimize capital structure. - UPS grounded MD-11 fleets post-crash, delaying holiday operations, while CarMax and James Hardie faced lawsuits and stock declines amid leadership changes a

Bitget-RWA2025/11/28 23:52
Harley-Davidson's 33 consecutive years of dividends demonstrate strong trust from investors