Bitcoin News Update: Shaky Leverage Revealed as Bitcoin’s $110k Recovery Doesn’t Prevent $817M in Liquidations
On Wednesday, Bitcoin's value dropped close to $108,000 before recovering to over $110,000 by Thursday, leading to a surge of forced liquidations in leveraged futures that reached $817 million. This sharp price movement followed the Federal Reserve's decision to lower interest rates by 25 basis points, but Chair Jerome Powell's reserved comments quickly subdued market enthusiasm, leaving investors uncertain about the Fed's next steps. Analysts described the downturn as a "sell-the-news" reaction, emphasizing the vulnerability of leveraged positions in the cryptocurrency market and the sector's heightened responsiveness to broader economic developments, according to a
The anticipated rate cut from the Fed did not generate lasting positive sentiment, as Powell suggested that a further reduction in December was not assured, which weighed on market confidence. This led to a rapid decline, with most liquidations impacting traders holding long positions. CoinGlass data showed that more than 165,000 traders had to exit their positions within a single day, including a $11 million BTCUSD long on Bybit—the day's largest liquidation. Hyperliquid, Bybit, and Binance reported liquidations of $282 million, $223 million, and $144 million respectively, highlighting the extent of leverage in the market, the CoinDesk article stated.
In leveraged trading, liquidations happen when positions are closed automatically due to inadequate margin, which can intensify price volatility. Experts pointed out that significant clusters of long liquidations may indicate short-term capitulation and possible market bottoms, while a short squeeze could signal a temporary peak. "The Fed's move to conclude quantitative tightening in December suggests a bullish outlook for risk assets like cryptocurrencies," commented Nick Ruck, director at LVRG Research. He added that if liquidity increases as the Fed anticipates, Bitcoin could rebound above $115,000 by November, the report mentioned.
Jeff Mei, BTSE's COO, highlighted the cautious approach seen across financial markets, noting that inflation remains above the Fed's 2% goal and that policy options are limited due to the ongoing government shutdown. "Asset prices are already high, and further monetary easing is unlikely unless there is a clear economic downturn," he remarked. Meanwhile, optimism grew after the U.S. and China made progress toward a new trade agreement, which could provide additional support for risk assets, as reported by CoinDesk.
Although short-term volatility persists, the overall economic environment is slowly getting better. Analysts believe Bitcoin's stability will depend on increased liquidity and lower leverage. "If liquidity grows as projected,
