Crypto Liquidation Surge: Fed Rate Cut Triggers $817M Wipeout Across Markets

The crypto market took a sharp hit this week, with Bitcoin sliding to $108,000 before recovering slightly above $110,000. The sudden drop wiped out more than $817 million in leveraged positions across major exchanges.

Many traders had hoped the market would rally after the Federal Reserve’s 25-basis-point rate cut, but that optimism faded quickly when Fed Chair Jerome Powell hinted that another cut in December isn’t guaranteed. His cautious comments triggered panic among investors, leading to what analysts are calling a “sell-the-news” reaction.

Why Is the Crypto Market Down Today?

At first, the rate cut looked like good news for crypto. Lower interest rates typically make risk assets like Bitcoin and Ethereum more appealing. But Powell’s mixed message changed the mood fast. He cut rates, yet warned about lingering inflation risks and uncertain economic conditions.

That uncertainty made traders pull back from risky positions, sparking a wave of forced liquidations as overleveraged bets were automatically closed out.

According to Nick Ruck, analyst at LVRG Research, it was a textbook case of market emotion.

“The Fed’s tone scared investors in the short term, but its plan to end quantitative tightening by December could actually be bullish for crypto in the long run,” he said.

Massive Crypto Liquidations Add Pressure

Data from CoinGlass shows that nearly 165,000 traders were liquidated in just 24 hours. The largest single liquidation was an $11 million Bitcoin long on Bybit. Exchanges like Hyperliquid, Bybit, and Binance saw hundreds of millions in positions wiped out, a sign of just how leveraged the market had become.

These forced sell-offs pushed Bitcoin prices even lower, fueling more panic.

Still, analysts say the market isn’t turning fully bearish yet. If Bitcoin can hold above its key $110,000 support, it could rebound toward $112,500 or even $115,000 as confidence returns. But if selling pressure continues, a retest of $108,000 or even $106,000 could be next.

Short-Term Pain, Long-Term Promise

On-chain analyst Ali Martinez noted that five out of six FOMC meetings this year have coincided with Bitcoin price corrections, while only one triggered a short-term rally. His analysis shows a clear pattern: Fed decisions often bring short-term volatility as traders react to interest rate and liquidity shifts.

The recent improvement in U.S.–China trade sentiment has helped calm nerves, but the market remains on edge. If the Fed follows through on expanding liquidity later this year, Bitcoin could stabilize above $115,000 in November.