The cryptocurrency market saw significant volatility as news broke about a possible investigation into Tether, which was compounded by escalating geopolitical tensions in the Middle East. On October 25, the Wall Street Journal reported that the U.S. Attorney’s Office may be investigating Tether for alleged third-party misuse of its platform. The news rattled the market, fueling investor anxiety and triggering widespread liquidations.
Market Impact: Heavy Liquidations Across Crypto Assets
The combined regulatory and geopolitical factors led to $380 million in daily liquidations, with long positions suffering $310 million of the losses. Altcoins were hit hardest, with over $90 million in liquidations, followed by Bitcoin at $65 million and Ethereum at $58 million. This surge in liquidations has intensified FOMO and left traders wary of further market drops.
Tether Denies Allegations as “Unsubstantiated”
Tether, the issuer of USDT, the largest stablecoin with a market cap around $120 billion, quickly responded to the allegations. CEO Paolo Ardoino dismissed the claims as “reckless” and “completely false,” emphasizing that no official investigation has been confirmed and highlighting Tether’s active collaboration with law enforcement to prevent platform misuse. Despite these reassurances, investor concerns lingered, reflected in the sharp price movements across the market.
Bitcoin and Major Cryptocurrencies Pull Back Amid Market Pressure
In the aftermath, Bitcoin, which had been approaching the critical $70,000 level, saw a significant retreat, dropping to $66,500 before slightly rebounding. This price dip was mirrored across major cryptocurrencies, including Solana, Ethereum, Avalanche, and Binance’s BNB, all of which experienced losses exceeding 4%. The sell-off underscores the caution among investors as multiple risk factors continue to impact the market’s outlook.
Adding to Investor Fears: Middle East Tensions Escalate
The situation intensified as tensions in the Middle East weighed further on investor confidence. Israel’s direct strikes on Iran in response to a recent missile attack sparked concerns of broader regional conflict, fueling risk aversion across global markets and hitting high-risk assets, like cryptocurrencies, particularly hard.
This is no financial advice. Includes third party opinion.