S&P Global Ratings has downgraded the stability rating of Tether’s USDT stablecoin from “constrained” to the lowest rating, “weak.”

The ratings agency said the new rating reflects Tether’s increased exposure to “higher-risk assets” backing its reserves, naming bitcoin, gold, secured loans, and corporate bonds as examples.

This story is an excerpt from the Unchained Daily newsletter.

Specifically, they claimed that bitcoin, which constitutes about 5.6% of USDT’s circulating supply, exceeds the over-collateralization buffer, raising concerns that a decline in bitcoin prices could lead to under-collateralization and threaten the stablecoin’s stability.

Tether CEO Paolo Ardoino responded to the agency’s latest assessment on X, saying “we wear your loathing with pride.”

“The traditional finance propaganda machine is growing worried when any company tries to defy the force of gravity of the broken financial system,” he added.

The rating report comes after research from onchain analytics firm Glassnode found that this cycle’s USDT netflow to exchanges had a “strong negative correlation with BTC’s mid-term performance.”