Saifedean on Stablecoins

Thesis: Tether is widely assumed to be bullish for the US dollar, having "found a whole new generation of bag holders around the world to buy the treasury shitcoin". Ammous runs the numbers on the most optimistic scenario imaginable and concludes Tether cannot meaningfully rescue US fiscal dynamics — while Tether's accumulation of Bitcoin makes it, in time, a bridge away from the dollar. As he puts it, "nothing stops this train" (a phrase he attributes to Lyn Alden) — not even Tether.

1. The thought experiment: how bullish for the dollar is Tether, really?

Ammous deliberately stacks every assumption in the dollar's favour:

• Tether grows 100-fold over ten years — a compound annual growth rate of ~60%, reaching a market cap of roughly $20tn by 2035 (as transcribed) - 80% of its reserves go into US treasuries across all maturities (today it buys only short-dated paper)
• Drawing on the quantitative-easing literature on how bond purchases affect yields, he assumes a maximally optimistic effect: buying 10% of the debt lowers yields by a full percentage point (the transcript garbles the literature's range here — most plausibly 0.2–0.5 points; see caveats below)
• Starting point: US debt ~$37tn, budget deficit ~$2tn, with debt, deficits and liabilities assumed to grow over the next decade only as fast as over the last — an assumption he calls extremely conservative, since he expects worse: a post-COVID "new normal" of spending, DOGE achieving "nothing more than rounding errors", likely new wars ("Israel wants more land"), and tariffs

Result: even this best-case scenario reduces the debt by only ~$3.7tn, or about 5.4% of it, over ten years. His conclusion: "Tether cannot fix what a century of fiat democracy ruined" — a century of inflation, debt and piled-up liabilities ^[1]. (Note: the $3.7tn is the projected debt reduction, not Tether's market cap — clarifying the figure I quoted earlier.)

2. The displaced-demand caveat

• Much of Tether's demand is not net-new demand for treasuries: when a currency collapses and its citizens switch to USDT, the central bank of that collapsed currency correspondingly holds fewer treasuries. It is displaced, not additional, demand
• Even granting entirely new demand, the deficit is too large and still growing — and none of it touches entitlements or defence spending

3. The dollar's endgame

The "inevitable fate" is default, devaluation, or default by devaluation — "essentially all more or less the same thing": those owed dollar liabilities will find they do not get what they were promised ^[1:1].

4. What this means for Tether itself

• Devaluation is not a big problem: its liabilities devalue alongside its assets
• Default is the main risk — including a targeted US default on Tether's bonds specifically (e.g. cancelling them over some alleged criminal use), a precedent he sees in what was done to Russia
• The hedge is Bitcoin — "the smartest thing anybody could do". Tether's position at the time: over 100,000 BTC (worth more than $10bn) against around $120bn in dollar-denominated reserves and treasuries — more than 10:1 fiat to Bitcoin ^[2]
• Bitcoin has "number go up technology", the dollar "number go down technology" — so, whether via default, devaluation or both, Tether's Bitcoin reserves will "inevitably" overtake its dollar reserves

5. Breaking the peg — upwards

The scenario the "Tether FUDsters" have long predicted — Tether breaking its peg — may finally come true, but upwards: with appreciating BTC reserves, Tether could revalue one USDT to $1.02 and keep revaluing as the dollar falls — "a dollar plus 2% per year… would be more attractive than the dollar for a lot of people"

This sets up a self-reinforcing cycle:

revaluation ↑ → demand shifts from USD to USDT → more Tether buying of BTC → BTC price ↑ → reserves appreciate → further revaluation ↑

The engine of the flywheel is asymmetry of scale: the US debt market is ~$37tn while Bitcoin is only ~$2tn, so even the small fraction of reserves Tether puts into Bitcoin moves that market far more than its treasury buying moves the bond market. End state: Tether "grows its way out" of being a dollar stablecoin into a Bitcoin-backed stablecoin, eventually re-denominated in Bitcoin — "just another mechanism for the scaling of Bitcoin". In Bitcoin Magazine's coverage of the talk: "Eventually, USD reserves go to zero next to BTC reserves… USDT keeps getting revalued upward until it is redeemable in bitcoin. USDT → BTCT", with Tether as a "transition monetary system" ^[1:3]

6. Bottom line

The world is already saturated with dollars, so Tether's capacity to prop up the debt market is extremely small. Rather than boosting the dollar, Tether is a way to transition away from it: it gives the world dollar access and Bitcoin access, and — by habituating people to digital money, private keys and public addresses — primes them for Bitcoin. "Even the most bullish scenario for USD is much more bullish for BTC."

Key figures at a glance

References

1. Saifedean Ammous: “Nothing Stops This Train” – Tether, ... (65%) ↩︎ ↩︎ ↩︎ ↩︎ ↩︎
2. What you missed at Bitcoin 2025 (13%) ↩︎
3. Saifedean Ammous: “Nothing Stops This Train” – Tether, Bitcoin... (21%) ↩︎