According to a Bloomberg report dated March 11, Fir Tree Capital Management, a hedge fund with $4 billion in assets under management, has put a significant short bet on the stablecoin tether (USDT).
According to Fir Tree clients, the position was structured as an “asymmetric trade,” which means the downside risk is limited and the potential return is large. According to the report, the hedge fund began to consider taking a short position in USDT in July.
The company reasoned that a major portion of the $24 billion in commercial paper backing the token is related to Chinese real estate developers, some of whom are struggling, and that if the paper loses value, both Tether’s reserves and the coin’s price might drop significantly. According to Bloomberg, The Fir Tree expects its investment to pay off within the year. If there is significant customer demand, the business may establish a separate fund specifically for shorting tethers.
What is Tether (USDT)?
Tether (USDT) is a stablecoin with a price set at $1.00. Stablecoins follow standard fiat currencies like the dollar, euro, and Japanese yen. Tether tokens are the native tokens of the Tether network and trade under the USDT symbol. USDT has a market value of around $68 billion as of October 2021.