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Crypto winters are hard to navigate
Crypto winter is that part of the cryptocurrency cycle when growth is sluggish, general momentum is sluggish and fresh money flows are limited into new projects.
Funding is difficult to find and profits dry up or freeze (No Pun intended)
Tether Emerges as a crypto winter winner
The issuer of the Tether stable coin have done remarkably well in the last quarter of the year 2023
This shining performance has been mainly due to its investment strategy and holdings.
Its holding of the US Treasury holdings have brought some amazing returns to the issuing company of Tether.
Tether Holding Limited is responsible for the issuance of Tether.
The certification report of Tether posted on January 31st 2024 shows that the company made a $2.85 billion profit in quarter 4 of 2023.
A sizable chunk of this profit comprises of $ 1 billion profits made by way of the interest income for holding the US Treasury securities alone.
In addition the company has assets like Gold reserves as well as Bitcoins in its portfolio.
Tether Holdings limited trivia: The company has 125 employees and its quarterly profits can statistically be seen as a profit of $22.8 per employee
As the year came to a close the numbers speak volumes about the company performance.
The annual profits are $6.2 billion and once again 4 billion of these are contributed from its US Treasuries portfolio.
In terms of asset allocation the company corpus allocation it holds and manages manages 80.3 billion in
Treasuries. Additionally it has bitcoins worth $2.8 Billion.
The company holds Gold reserves $3.5 billion and additionally it also has venture capital investments worth $1.5 billion.
Looking at the portfolio one can say it has a low risk approach towards its holdings as the US Government Treasury bonds generate income from the money lent to the government by various investors and in return they get a fixed yield return on the bond.
The profits for the Tether holding limited have come largely due to the 4.7% Treasury bond yields.
This type of investments are seen as a safe bet from the safety point of view.
Quite a Jump for Tether holding limited.
Those who track this space would recollect that not so long ago there were a series of bankruptcies filed by the crypto companies in the year 2022.
At such a juncture the Tether Holdings limited did a strategic move and started to back and support its Stable coin with stable and higher quality assets such as
- Government Treasury Bonds and
- Gold reserves
Making the strategic move in September
In 2023 September by its own confession it emerged as the largest investor of the US Treasuries.
Adding extra cushion to its Exposure
The company had exposure to $4.8 billion in collateralized loans which were outstanding.
To cover this the management decided to add $5.4 billion additionally allocated to the treasury bonds.
Final thoughts
Tether Holding limited surely has deep pockets however its management has shown a lot of maturity. Instead of playing the high risk high reward game it stuck to some more traditional assets and this strategy has paid good dividends for the company.
Post based on report
Posted Using InLeo Alpha
