Key Takeaways
Bitcoin fell below $110K before rebounding after Powell’s dovish remarks on Fed policy.
K33 Research says the recent leverage purge sets up a favorable accumulation environment.
BTC miners surged over 10% as investors view them as AI infrastructure plays.
Analysts expect ETF inflows and policy easing to support Bitcoin in the medium term.
Bitcoin Stabilizes After Leverage Flush
Bitcoin (BTC) and the broader crypto market finished lower on Tuesday but bounced off their worst levels as U.S. Federal Reserve Chair Jerome Powell hinted that the central bank’s tightening cycle may be nearing its end.
BTC dropped to an intraday low of $109,800 before rebounding to $112,461, down 2.8% over the past 24 hours, according to CoinDesk data. Ether (ETH) fell 4% to $4,123, while BNB, XRP, and Dogecoin dropped between 4% and 6%. The CoinDesk 20 Index slipped 3.2%.
Prices found stability after Powell said the Fed is “nearing the end” of its quantitative tightening process, noting that the labor market is cooling and liquidity conditions are tightening — a combination that could justify another rate cut later this month.
“After the recent leverage purge, we turn constructively bullish on BTC, though patience remains key,”
said Vetle Lunde, Head of Research at K33 Research.
According to Lunde, the massive leverage flush that followed last week’s market liquidation has reset market positioning, paving the way for healthier spot-driven accumulation.
“We finally see current levels as attractive for increasing spot BTC exposure, as leverage has violently been cleared,” he wrote.
“Combined with a supportive backdrop — expansionary policy expectations, high institutional demand, and pending ETF catalysts — the setup favors gradual accumulation.”
Leverage Reset Points to Market Bottom Formation
Lunde noted that similar leverage unwinds in previous market cycles often marked local bottoms, allowing patient investors to re-enter at stronger risk-adjusted levels.
K33 data also shows a narrowing spread between Binance BTC perpetual futures and Coinbase spot prices, signaling that derivative-driven volatility is subsiding.
Liquidity, however, remains thin as traders recover from forced liquidations, with K33 expecting consolidation before renewed upside momentum.
Miners Surge as AI Narrative Boosts Demand
Crypto mining stocks led the day’s digital asset rebound, with Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) each soaring over 10%.
Investors continue to bid up BTC miners as AI infrastructure plays, betting that surging demand for computing power from the artificial intelligence sector will benefit these firms’ profitability and hardware valuations.
Dovish Fed and Political Headlines
U.S. equity indexes also pared early losses after Powell’s remarks, though the Nasdaq and S&P 500 still closed slightly lower — down 0.75% and 0.15%, respectively.
Late-session volatility resurfaced after President Trump posted on Truth Social, suggesting potential restrictions on Chinese cooking oil imports, sparking renewed trade concerns.
Despite short-term uncertainty, analysts agree that Fed easing, ETF demand, and institutional accumulation continue to create a favorable medium-term environment for Bitcoin.
