Bitcoin Crash to $10K? JPMorgan Fuels Strong Tether Sell-Off Fears

On Feb. 13, 2025, JPMorgan analysts issued a report warning that Tether (USDT), the largest stablecoin issuer, may need to sell some of its Bitcoin (BTC) holdings to comply with proposed U.S. stablecoin regulations. Bitcoin price dropped 1.25% after the news.

Are US Stablecoin Regulations Bad For Bitcoin, Crypto Market? BTC Crash to $10K Predicted

The proposed U.S. stablecoin regulations aim to increase transparency and ensure stablecoin issuers maintain reserves in highly liquid and low-risk assets.

According to JPMorgan, a significant portion of Tether’s reserves—which include Bitcoin, corporate bonds, and other riskier assets—may not qualify under the new rules. Notably, only 66-83% of Tether’s reserves meet the new regulatory requirements, potentially forcing the company to alter its investment strategy.

This could compel Tether to restructure its holdings by moving away from assets like Bitcoin and increasing its exposure to U.S. Treasuries and other approved financial instruments.

Note: According to its publicly identified Bitcoin address, Tether currently holds 83,758 Bitcoin, valued at over $8 billion at current market prices. The company initially announced in 2023 that it would allocate up to 15% of its quarterly profits to Bitcoin purchases as part of its reserve management strategy.

In its Q4 2024 attestation report, released last month, Tether updated its reserves as of December 31, 2024. The report revealed that Tether’s reserve buffer exceeded $7 billion for the first time, while the company recorded $13 billion in total profits for 2024.

“Tether is one of the world’s largest BTC buyers, holding nearly 85,000 BTC,” noted popular crypto bear Jacob King, adding:

“If (when) they sell and halt purchases, BTC will easily crash far below $10K again.”

JPMorgan’s analysts further raised concerns about the systemic impact of Tether’s actions on the cryptocurrency market. Tether is crucial in crypto liquidity, as its USDT stablecoin is widely used for trading and transactions.

A shift in its reserve allocation could not affect Bitcoin’s price and the broader crypto market stability.

Tether Counters JPMorgan

However, Tether was quick to counter JPMorgan’s claims, with CEO Paolo Ardoino accusing the analysts of being “salty” for not owning Bitcoin.

He emphasized Tether’s strong financial position, including over $20 billion in group equity, suggesting the company has enough liquidity to navigate any regulatory changes without resorting to drastic measures like selling Bitcoin.

While a lot still needs to be defined during consultations on the bills in coming weeks, even in the most extreme scenario, JPMorgan discounts the fact that Tether’s group equity (on top of stablecoin reserves) is over $20 billion in other very liquid assets and is generating…

— Paolo Ardoino 🤖🍐 (@paoloardoino) February 13, 2025

Bitcoin ‘Falling Wedge’ Patterns Sees $100K Target Next

Bitcoin is consolidating within a falling wedge pattern, a historically bullish formation that suggests a potential breakout in the coming days. The pattern, identified on the 4-hour BTC/USD chart, shows Bitcoin making lower highs and lower lows while converging toward a tightening range.

As of Feb. 14, the cryptocurrency was trading around $96,968, just below the 50-day EMA ($97,182) and the 200-day EMA ($98,889).

A breakout above the wedge’s upper boundary could trigger a strong upward move, with potential price targets at $101,385 and $106,811, as indicated by the measured move of the pattern.

The Relative Strength Index (RSI) stands at 51.81, signaling neutral momentum.

A decisive push above the 50-EMA and upper trendline could validate the bullish breakout scenario. However, failure to reclaim key resistance levels may lead to a breakdown toward lower support zones near $93,400 or even $90,000.