Bitcoin fell to around $108,000 on Wednesday, before bouncing above $110,000 on Thursday after a volatile session that saw nearly $817 million in leveraged futures liquidations, with long traders suffering huge losses.
The move came just hours after the Federal Reserve announced a widely expected 25-basis-point rate cut, only for Chairman Jerome Powell to temper optimism with cautious comments suggesting a December cut is not guaranteed.
Liquidation occurs when traders using borrowed funds are forced to close their positions because their margin falls below the required level. On crypto futures exchanges, this process is automated, as when prices rise faster than the leveraged trade would allow, the platform sells the position on the open market to cover losses.
Large clusters of long liquidations may signal capitulation and a potential short-term decline, while massive short declines as momentum fluctuates may precede a local top. Traders can also keep an eye on where liquidation levels are concentrated, helping to identify areas of forced activity that may act as near-term support or resistance.
Data from CoinGlass shows that nearly 165,000 traders were liquidated in 24 hours, including $11 million of BTCUSD on Bybit, the biggest hit of the day. Hyperliquid led all venues with $282 million in liquidations, followed by Bybit with $223 million and Binance with $144 million, underscoring just how much leverage remains in the market.
“While the Fed cut interest rates as expected, Chair Powell’s cautious press conference triggered a sharp sell-off after she said at a ‘sell-the-news’ event that the anticipated cut in December is not guaranteed,” Nick Ruck, director of LVRG Research, said in a note to CoinDesk. ,
“While short-term volatility remains, the Fed’s pivot to end quantitative tightening in December signals a bullish undercurrent for risk assets like crypto, which could lead to renewed upside for Bitcoin and Ethereum as cheap capital flows in the coming months,” Rook said.
Meanwhile, BTSE COO Jeff Mei said the decline reflected “cautious conditions across all markets.”
“Inflation remains above the 3% target, and the Fed has limited room for maneuver until clearer data comes amid the government shutdown,” Mayi said. “With asset prices already high, further easing is unlikely until economic weakness becomes more pronounced.”
The wave of liquidations comes just as investors are digesting an improvement in geopolitical sentiment after the US and China signaled progress toward a new trade deal.
Despite near-term volatility, analysts say macro conditions are becoming more favourable. If liquidity expands in line with the Fed’s timeline, Bitcoin could reach firmly above $115,000 in November – assuming leveraged traders don’t get caught in too much of a swing again.