Cryptocurrency Market Faces Turmoil Amid Tether Investigation

The cryptocurrency market has experienced significant volatility as news surfaced about the U.S. federal government’s investigation into Tether, a major cryptocurrency company. This led to substantial price swings, with Bitcoin plummeting over $3,000 at one point, hitting a low of $65,644, a near 4% drop. Other cryptocurrencies like Ethereum, Solana, and Dogecoin also suffered steep declines. Although the prices have slightly recovered, the market impact remains significant.

Approximately 140,000 traders faced liquidation within the 24-hour period, amounting to nearly $400 million, mostly from long positions. The investigation is driven by concerns that Tether may have violated sanctions and anti-money laundering regulations. Reports suggest the probe is focused on whether its digital currency has been used to finance illegal activities, including drug trafficking and terrorism.

As a result, crypto-related stocks in the U.S. market saw substantial losses. Marathon Digital Holdings (MARA, Financial) dropped over 6%, Riot Platforms fell more than 5%, and Canaan Inc. saw a decline of 4.79%. Market analysts note that the sell-off was partly news-driven, with the true impact of the investigation on the crypto market still uncertain.

Tether and its stablecoin, USDT, have been under scrutiny from U.S. regulators due to their significant role in the cryptocurrency sector, acting as a substitute for the dollar in regions where U.S. currency is restricted. Tether’s market cap stands at approximately $120 billion, making it the third-largest cryptocurrency and a key player in daily trading volumes.

Looking at the broader market dynamics, Trump’s political influence in favor of crypto development contrasts with the more regulatory-focused approach from other political figures. Crypto assets, particularly Bitcoin, saw a cooling in their upward trend, partly due to tighter financial conditions and increased yield rates. The outlook remains uncertain as market expectations shift with the political landscape.