Tether's Treasury Exposure Reaches Record High as US Debt Hits $30 Trillion

The US Treasury market has reached a critical juncture, with Tether emerging as one of the largest non-sovereign holders of US government debt. The stablecoin issuer's $141 billion investment in Treasuries is helping to prop up the market, but at what cost? As traditional buyers such as foreign central banks and the Federal Reserve pull back, crypto-native capital is stepping in to fill the gap.

The trend is driven by a combination of factors, including rising Treasury yields and a decrease in liquidity. This has created a fragile mix that could be vulnerable to instability, with leverage ratios above 18:1 sitting in the system.

The Congressional Budget Office has warned that interest payments on US debt could reach $2.2 trillion by 2036 if yields stay elevated. This is not a distant hypothetical, but a reasonable base case given current market conditions.