Bitcoin and other major cryptocurrencies encountered sharp price swings following a controversial report on Tether, which occurred amid escalating tensions in the Middle East.

These events led to substantial losses for traders holding highly leveraged positions, with daily liquidations soaring to around $380 million.

Tether’s Denial Fails to Ease Market as Bitcoin and Altcoins See Sharp Liquidations

On October 25, the Wall Street Journal published an article suggesting that the US Attorney’s Office was investigating Tether. According to the report, allegations involve third-party use of Tether’s platform to possibly conduct illegal activities.

Tether strongly denied the accusations, calling the article “reckless” and based on “unsubstantiated claims.” In a public statement, Tether stressed the absence of official confirmation from any authority and criticized the article’s reliance on unverified sources. Tether’s USDT is the largest stablecoin in the industry, with a market capitalization of around $120 billion.

“At Tether, we deal regularly and directly with law enforcement officials to help prevent rogue nations, terrorists and criminals from misusing USDt. We would know if we are being investigated as the article falsely claimed. Based on that, we can confirm that the allegations in the article are unequivocally false,” Tether CEO Paolo Ardoino said.

Read more: A Guide to the Best Stablecoins in 2024

The news led to a bearish market shift, halting Bitcoin’s attempt to breach $70,000 — a level it hasn’t seen in three months. According to BeInCrypto data, Bitcoin’s price dipped sharply, hitting a daily low of $66,500 before rebounding slightly to about $66,932 as of press time.

Other major digital assets also saw declines. Solana, Ethereum, Avalanche, and Binance’s BNB each suffered losses exceeding 4%.

Meanwhile, investor confidence took an additional hit as escalating Middle East tensions affected risk appetite. Israel announced direct strikes against Iran in response to a recent missile attack, fueling concerns that the ongoing hostilities could expand into a broader regional conflict.

Combined, these factors pushed daily liquidations to around $380 million, with most losses falling on long traders betting on price increases. Long traders lost $310 million, while short traders saw losses of $68.19 million.

Read more: Bitcoin Price Prediction 2024/2025/2030

According to Coinglass data, altcoins were the hardest hit, with liquidations exceeding $90 million. Bitcoin and Ethereum followed, experiencing liquidations of $65 million and $58 million, respectively.