The crypto market faced a dramatic sell-off this week as Bitcoin plunged to $108,000 before cautiously rebounding above $110,000. The sudden drop wiped out more than $817 million in leveraged positions across major exchanges including Binance and Bybit.

Investors initially welcomed the Federal Reserve’s 25-basis-point rate cut as a bullish signal — but optimism evaporated quickly after Fed Chair Jerome Powell hinted that another cut in December isn’t guaranteed. His cautious tone triggered panic across the markets, leading to what analysts are calling a classic “sell-the-news” reaction.

Why Crypto Crashed This Time

At first glance, lower rates should have been good news for cryptocurrencies — cheaper capital usually boosts appetite for risk assets like Bitcoin and Ethereum.

However, Powell’s mixed message and warnings about lingering inflation risks and uncertain economic conditions flipped market sentiment almost instantly.

Traders rushed to close high-risk positions, setting off a cascade of forced liquidations as over-leveraged bets were automatically closed by exchanges’ algorithms.

Nick Ruck from LVRG Research summarized the situation perfectly:

“The Fed’s tone spooked investors in the short term. But its plan to end quantitative tightening by December could prove long-term bullish for crypto.”

165,000 Traders Wiped Out

Data from CoinGlass shows that nearly 165,000 traders were liquidated within 24 hours.

The largest single liquidation was a $11 million long position in Bitcoin on Bybit.

Other major exchanges like Hyperliquid and Binance also saw hundreds of millions in forced closures — a sign of just how over-leveraged the market had become.

The mass liquidations pushed Bitcoin prices even lower, fueling further panic. Still, analysts caution that the market is not entirely bearish yet.

The key support level remains at $110,000 — if Bitcoin can hold above it, it may rebound toward $112,500 or even $115,000.

However, if selling pressure persists, a retest of $108,000 or $106,000 could follow.

Short-Term Pain, Long-Term Potential

On-chain analyst Ali Martinez noted that five of the six FOMC meetings this year have coincided with Bitcoin price corrections, while only one triggered a short-term rally.

His data shows a clear pattern: Fed decisions tend to cause short-term volatility, but can support long-term growth as liquidity conditions improve.

Improved U.S.–China trade sentiment has helped calm nerves slightly, yet the market remains tense.

If the Fed continues to expand liquidity later this year, Bitcoin could stabilize above $115,000 in November, signaling a potential recovery phase.

#bitcoin , #CryptoMarket , #Fed , #Powell , #crypto

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