What if a Tether redemption run jolts funding markets?
A Tether redemption run forces liquidation of T-bills and CP, jolting short-term funding and cratering ETH (-8.1%) as the dominant offshore-liquidity token; the financial-conditions tightening is the real-world transmission channel. Rhymes with the Sep-2008 Reserve Primary money-fund 'breaking the buck' that froze CP markets. Forward angle: Tether's reserves are now mostly T-bills, so the funding-market jolt is more concentrated in bills than the 2008 CP freeze.
how we built this number — every step
The class rate is measured from our dated, sourced event library (decade-normalized Poisson — the full table is public at base_rates.json). The variant’s share within its class is the analyst’s editorial call, published so you can audit it. A wider range means thinner precedent. Full recipe: methodology · scored at Reality Check.
The butterfly cascade
How this trigger trickles across markets, left → right — the root shock, its first‑order moves, then the ripple effects. Drag any node; tap a market for its real price history.
Resolution timeline — how this probability is moving
Our model's odds (gold) over time vs the crowd's (Polymarket, blue), from the past toward the 0–6 months horizon. Each dot is a real macro event that nudged the probability — green pushed it up, red pushed it down. Tap a dot for the source. The gold path is an illustrative reconstruction anchored to today's estimate — real dated events, not a live re-estimate history.
What it would mean
If this plays out, it is a mixed shock. Heavy institutional USDT redemptions force Tether to liquidate commercial paper and T-bills, jolting short-term funding markets. The trigger decomposes into signed root‑shocks — Crypto confidence ▼ · Crypto liquidity ▼ · Financial conditions ▲ — which propagate through our causal graph to the markets below.
If it happens — the markets it would move
Biggest moves first. Projected moves are cascade-model priors; hist A–B% = what comparable past events actually did (measured abnormal returns), and model prior · unmeasured marks markets with no analogue backing yet. Tap any market for its price history.
| Market | Class | Projected move | |
|---|---|---|---|
| 1 | MicroStrategy MSTRon Hyperliquid 📈 chart | Equity | ▼ -8.9% hist -6.78–-1.6% · other way -7.85% (n=12) |
| 2 | Ether ETHon Hyperliquid 📈 chart | Crypto | ▼ -8.1% hist -19.7–+5.08% · other way -6.7% (n=11) |
| 3 | Solana SOLon Hyperliquid 📈 chart | Crypto | ▼ -5.6% hist -15.49–+4.06% · other way -18.56% (n=11) |
| 4 | Bitcoin BTCon Hyperliquid 📈 chart | Crypto | ▼ -5.0% hist -18.08–+4.13% · other way -5.65% (n=11) |
| 5 | Coinbase COINon Hyperliquid 📈 chart | Equity | ▼ -3.5% hist -4.28–-1.2% · other way +2.5% (n=11) |
| 6 | Hyperliquid (HYPE) HYPEon Hyperliquid | Crypto | ▼ -1.9% model prior · unmeasured |
Probable recommendation
Why we may diverge from history
Trust the cascade short on BTC; the +11.3% is a single SVB-2023 banking-panic regime where BTC was the non-bank hedge — a Tether redemption run hits crypto's own funding plumbing, inverting that channel.
Historical precedent — what analogous events actually did
Across 31 analogous events (overlap‑weighted), as abnormal returns — market beta stripped, so it's the event's own effect, not the market backdrop. Shown at 20 days (persistent) and 5 days (immediate); ↺ fades = the two horizons disagree. Confidence = consistency × sample × significance.
| Asset | History says | Abnormal (20d · 5d) | Hit | n | Confidence | vs cascade |
|---|---|---|---|---|---|---|
| Bitcoin BTC | SHORT | -14.4% · 5d -8.8% | 82% | 11 | 0.59 | ✓ matches cascade |
| SOL SOL | SHORT | -11.9% · 5d -15.8% | 78% | 9 | 0.51 | ✓ matches cascade |
| ETH ETH | SHORT | -14.4% · 5d -11.7% | 70% | 10 | 0.36 | ✓ matches cascade |
| MSTR MSTR | SHORT | -2.5% · 5d -4.9% | 66% | 28 | 0.27 | ✓ matches cascade |
| 10y yield DGS10 | SHORT | -18bp · 5d -9bp | 64% | 31 | 0.25 | · |
| High-yield credit HYG | SHORT | -0.2% · 5d +0.1% ↺ fades | 58% | 26 | 0.13 | · |
| US dollar DXY | LONG | +0.4% · 5d +0.1% | 56% | 31 | 0.11 | · |
| Gold XAU | SHORT | -0.6% · 5d -0.4% | 51% | 28 | 0.02 | · |
| COIN COIN | SHORT | -1.0% · 5d -1.2% | 44% | 9 | 0.00 | ✓ matches cascade |
| Volatility VIX | LONG | +2.9% · 5d +0.3% | 48% | 29 | 0.00 | · |
Why this probability
Tether reserves now heavily T-bill backed and attested; institutional redemption run jolting funding is a tail. A base‑rate‑anchored prior, continuously scored against what actually happens — not a forecast.