Crypto Liquidations Top $1 Billion as Senate Probes Tether’s U.S. Reserve Manager

A $1.19 Billion Liquidation Flush Hits Leveraged Traders

Late on Thursday, bitcoin slid from roughly $83,200 to a low near $80,400. Two catalysts drove the move. Federal Reserve minutes indicated that most officials expected another rate hike before the end of the year, and a report that the Pentagon was preparing for renewed combat in Iran pushed oil prices higher. A warning from Ethereum researcher Justin Drake that artificial intelligence could eventually break the cryptography protecting wallets added to the nervousness.

Because traders had loaded up on leverage while bitcoin moved sideways between $83,000 and $87,000, the breakdown triggered a cascade. Across the market, about $1.19 billion in positions was liquidated within 24 hours, and more than $1 billion of that came from traders betting on higher prices.

Ether took the heaviest damage. Roughly $356 million in ETH positions were wiped out, compared with $298 million for bitcoin, even though bitcoin’s market value is more than five times larger. Measured against size, ether’s losses ran about six times higher. Solana accounted for around $71 million in liquidations, XRP for $34 million and NEAR for $25 million. The largest single liquidation was an ether position of nearly $20 million on the decentralized exchange Hyperliquid. Ether fell more than 3% to about $2,490, while bitcoin lost around 1%.

Bitcoin Rebounds as Trump Rules Out an Iran Strike

The pressure eased on Friday after President Donald Trump said the United States would not strike Iran before the midterm elections. Bitcoin recovered to about $82,200, and oil prices dropped. The bounce squeezed bearish traders: about 78% of the roughly $25 million liquidated over four hours came from short positions.

Sentiment remains cautious rather than panicked. The Fear and Greed Index stood at 59 on Friday, down from 64 a day earlier. Traders are also watching the calendar, since Saturday marks one year since the record $19 billion single-day liquidation of October 10, 2025, which was roughly sixteen times Thursday’s total.

Senate Investigator Targets Tether’s Link to Cantor Fitzgerald

While the market digested the sell-off, Washington delivered its own headline. Senator Richard Blumenthal, the top Democrat on the Senate Permanent Subcommittee on Investigations, sent a letter on Thursday to Brandon Lutnick, chief executive of Cantor Fitzgerald. Lutnick is the son of Commerce Secretary Howard Lutnick, who handed him the firm’s leadership when he joined the administration.

Cantor holds and manages Tether’s reserves in the United States, and the two companies share several other business interests. Blumenthal’s letter asks what steps the firm has taken to examine allegations that USDT has been used in illicit finance, including activity linked to Iran’s shadow banking network and Russian sanctions evasion. He also questions Cantor’s banking and sanctions safeguards and points out that, although Tether describes itself as operating from El Salvador, most of its assets sit in the United States. Neither Cantor nor Tether had commented at the time of reporting.

The letter follows Blumenthal’s earlier review of Tether’s role in Iran’s financial system. It also carries political weight: prediction markets currently give Democrats a better-than-even chance of winning a Senate majority, with Kalshi near 61% and Polymarket near 64%. A majority would hand Blumenthal and other critics of the industry committee gavels and subpoena power.

What It Means for the Market

The two stories share one theme: risk. Leverage amplified a macro shock into a billion-dollar flush, and regulatory attention is moving closer to the infrastructure that supports the stablecoin market. For now, no wrongdoing by Cantor or Tether has been established, and the letter is a request for information. Investors should keep an eye on interest-rate expectations, oil and geopolitics, and any response from the companies. This article is for informational purposes only and is not financial advice.