Why Did The Bitcoin And Ethereum Price Crash?

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As an analyst with over two decades of experience in the financial markets, I have seen my fair share of market volatility and unpredictability. The recent crash in Bitcoin and Ethereum prices below $67,000 and $2,500, respectively, has once again reminded me that the crypto market is no exception to this rule.

1) In the past 24 hours, the prices of Bitcoin and Ethereum have plummeted, dipping below $67,000 and $2,500 respectively. This sudden drop is linked to recent reports about an investigation into Tether, the issuer of USDT. Additionally, tensions between Israel and Iran may have played a role in this price decline as well.

Why The Bitcoin And Ethereum Price Crashed

The prices of Bitcoin and Ethereum dipped below $67,000 and $2,500 respectively, following a report from the Wall Street Journal that the US Department of Justice (DOJ) has initiated an investigation into crypto company Tether. The federal probe is reportedly examining Tether for potential violations of sanctions and anti-money laundering regulations.

Furthermore, the report disclosed that the U.S. Treasury is contemplating imposing penalties on Tether for conducting transactions with entities and parties under U.S. sanctions. This revelation led to a significant drop in the value of Bitcoin and Ethereum as it triggered a massive crypto market selloff, causing panic and apprehension among investors.

After a report suggested an investigation into Tether, its CEO Paolo Ardoino stated in a post that they were not under investigation and dismissed the Wall Street Journal’s claims as “recycling old rumors.” Yet, this comment did little to halt the decline in prices, as they continued to drop following his post.

Prior to the release of the report, Bitcoin’s price was attempting to regain the $68,000 mark as a support level, while Ethereum was steadily holding above $2,500. Yet, if the news proved accurate, it had the potential to disrupt this bullish trend, causing Bitcoin to drop below $67,000 almost instantly.

Indeed, Tether being investigated could have far-reaching impacts on the crypto market, considering that USDT, which is the largest stablecoin by market cap, is widely used across the market. It is worth mentioning that the stablecoin lost its dollar peg following the report of the DOJ’s investigation. 

Israel’s Attack On Iran Also Contributed

The Israeli counterstrike on Iran may have played a role in the recent drop in Bitcoin and Ethereum prices. Israel’s response to Iran’s earlier missile attack occurred at dawn on October 26, which coincided with an attempt by the crypto market to recover from the impact of the Tether investigation allegations.

Anticipating developments, the crypto market showed signs of distress when Israel launched an attack on Iran, due to the renewed escalation of tensions in the Middle East and the potential for a larger conflict. While Iran has yet to officially retaliate against Israel, Bitcoin and Ethereum seem to be reacting prematurely to the possibility.

Currently, the downward trend in the prices of Bitcoin and Ethereum appears unfavorable. As per analysis by popular expert Justin Bennett in a recent post, if this breakdown pattern persists over the weekend, any rebounds next week might only serve as opportunities for further selling.

The decrease in Bitcoin and Ethereum prices recently occurred nearly two weeks before the upcoming U.S. presidential elections, sparking excitement within the crypto market over a potential Donald Trump win. A Trump victory is perceived as positive for the crypto market since he has openly expressed his support for cryptocurrencies.

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2024-10-27 01:11