Bitcoin and the altcoins went through massive volatility on Friday night after a controversial report from the Wall Street Journal, which was denied by Tether’s CEO immediately.

However, the damage was done, which harmed over-leveraged traders, as the liquidations skyrocketed to over $400 million on a daily scale.

CryptoPotato reported WSJ’s claims that the US federal government had launched an investigation into the company behind the world’s largest stablecoin for possible violations of anti-money laundering rules and sanctions.

It further asserted that prosecutors at the Manhattan US attorney’s office investigated whether USDT was used by bad actors to avoid sanctions and other US rules.

Minutes after the report went out, Tether CEO Paolo Ardoino refuted the claims made by the WSJ, saying, “As we told to WSJ, there is no indication that Tether is under investigation. WSJ is regurgitating old noise. Full stop.”

Later on, he added that the stablecoin issuer, which has now expanded its presence into many other industries, including BTC mining, deals “regularly and directly with law enforcement officials to help prevent rogue nations, terrorists, and criminals from misusing USDT.”

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…

— Paolo Ardoino (@paoloardoino) October 25, 2024

Such news tends to have an immediate impact on prices in the cryptocurrency market, and this time was no exception. BTC stood close to $69,000 but dumped instantly by over three grand to $65,500. It recovered some ground and now trades at almost $67,000.

With most altcoins following suit, the total liquidations have skyrocketed to $405 million on a daily scale. Interestingly, alts were responsible for the lion’s share, which was more than $100 million, with BTC and ETH trailing at $68 million and $65 million, respectively.

Almost 150,000 over-leveraged traders have been wrecked in the past day, according to CoinGlass.

While bitcoin demand among large investors is picking up as time passes, smaller market players are lagging.

According to a CryptoQuant report, the holdings of retail bitcoin investors are growing at a historically slow pace, even as this cohort of players gradually returns to the market amid BTC’s ascent to the $70,000 level.

Retail Investor Holdings Slowly Growing

In the past 30 days, retail bitcoin holdings have increased by just 1,000 BTC. The total assets by this group of market participants have also risen by 18,000 BTC since July 3, when it recorded a local bottom. At the time of writing, retail investors held 1.753 million BTC, slightly lower than the 1.765 million record at the end of 2023.

Since May 2023, when retail holdings grew by 27,000, the balances of these investors have been reducing. Before this period of declining holdings, retail investors saw moments of high growth: market recovery in April 2020 after the COVID-19 crash, the previous bull cycle top in April 2021, and the 2022 bear market following the crash of the bankrupt crypto exchange FTX.

Currently, larger bitcoin investors have outpaced retail players. The holdings of larger entities are growing at a faster pace than retail investors, with the former adding 173,000 BTC to their stash since the start of the year. On the other hand, the latter have grown their holdings by just 30,000 BTC year-to-date.

“Retail investors saw their holdings increase significantly in the bear market of 2022, when they peaked at a yearly growth rate of 347K Bitcoin,” noted CryptoQuant.

Low BTC Transfer Activity

The slow growth among retail investors can also be seen in their overall BTC transfer activity to exchanges, which has plunged from 2,700 BTC in the first half of 2023 to 2,000 BTC in the second half and now 1,400 BTC in 2024. CryptoQuant says this indicates that retail investors have not been selling their assets aggressively, mirroring their weak BTC purchases.

Additionally, daily bitcoin transfers by retail investors are at their lowest levels. The volume of these transfers was $326 million in mid-September, the lowest level seen since 2020.

Interestingly, analysts said historical data shows low BTC transfer activity among retail investors preceding price rallies; hence, the current state of smaller bitcoin investors could be a positive signal.

Bitcoin’s price went through a massive rollercoaster on Friday night, dumping by $3,000 in minutes before it recovered some ground to $67,000.

The altcoins have it even worse, and the total crypto market cap has shed about $70 billion overnight.

BTC’s Down and Up

The business week started quite promising for the primary cryptocurrency, which jumped on Monday from $68,000 to $69,500 to chart its highest price tag since late July. However, it faced an immediate rejection at that point that pushed it south to $67,000 by the end of the day and on Tuesday.

More volatility and price declines followed on Wednesday as the bears initiated a massive leg down that drove BTC down to $65,000. Nevertheless, the bulls intervened, and bitcoin went on the offensive, jumping to almost $69,000 on a couple of occasions on Thursday and Friday.

This is when the actual price fluctuations arrived following a report by the WSJ claiming that the US government had launched an investigation against Tether. Although the stablecoin issuer denied the claims, the damage was done, and BTC dumped by over three grand in minutes to $65,500.

It managed to recover some ground and now trades close to $67,000, but this volatility led to more than $400 million in liquidations. Being 1.3% down on the day means that its market cap has slipped to $1.320 trillion. However, BTC’s dominance over the alts has shot up to 55.7% on CG.

Alts Bleed Out

The news impacted the altcoins even more, as shown by the growing BTC dominance. Ethereum, Binance Coin, Tron, Ripple, Bitcoin Cash, and Cardano have dropped by 1-3.5% in the past day. SOL, DOGE, TON, AVAX, LINK, and SHIB have dumped even more, with losses of up to 5.3% in the case of the second-largest meme coin.

Even more painful declines come from the likes of TIA (-14%), APT (-10%), MEW (-10%), KAS (-10%), AR (-10%), GALA (-10%), and JASMY (-9.5%).

Overall, the total crypto market cap has fallen to $2.37 trillion on CG, which means that it has lost approximately $70 billion in a day.