The hedge fund Fir Tree Capital Management’s investors claim it has developed a method to short the stablecoin tether. A report notes that “clients of the firm” said the potential to reap big rewards from shorting the world’s largest stablecoin is great.
Hedge Fund Investors Claim Hedge Fund Created a Method To Short Tether Fir Tree Bets to Pay Off in 12 Months
The market value tied to stablecoin (USDT), was updated on March 6, 2022. surpassedThe $80 billion mark. Tether is the largest stablecoin by market capitalization and it represents 4.43% of the entire crypto economy’s worth ($1.8 trillion) on March 11, 2022.
Bloomberg reports that the hedge fund developed a method to shorten USDT (USDT) according to sources sourced from Fir Tree Capital Management clients. The shorting trade may sound absurd because USDT is relatively stable and Fir Tree believes its short bet could win within 12 months.
The report claims that Fir Tree’s thesis is a reported $24 billion worth of USDT backed by high-yield commercial paper. The hedge fund thinks that much of that exposure is associated with China’s real estate businesses. Bloomberg’s Katherine Burton mentions that China’s real estate economy has been in dire straits, as the real estate giant Evergrande Group is in the midst of being restructured by the government.
“While Tether has said it doesn’t own Evergrande paper, Fir Tree expects that some of the paper it does own will lose value, causing a potentially large drop in the reserves it holds, the investors said,” Burton writes in her report about Fir Tree’s stablecoin short idea.
Fir Tree Research was helped by third-party experts
There have been many theories about Tether, high-yield paper and other crypto companies. In April 2021, Tether published the firm’s quarterly assurance report which disclosed how USDTs were backed.
Since that time, assurance reports have been released by the company. MHA Cayman has published the latest Tether assurance data. It explains that Tether holds less commercial paper than in previous quarters.
“Fir Tree started looking at shorting Tether in July, and did research including hiring third-party experts,” Fir Tree investors told Burton. “[Fir Tree] is considering setting up a separate fund for the sole purpose of shorting Tether if there is enough client interest,” the report added.
How do you feel about Fir Tree, the hedge fund that shorted the USDT stablecoin token (USDT),? Comment below and let us know how you feel about the subject.
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