The Federal Reserveâs latest rate cut, expected to boost risk assets, instead triggered one of the sharpest crypto selloffs of 2025.
More than $1.1 billion in leveraged positions were liquidated within 24 hours, sending shockwaves across global markets.
At first glance, this seems contradictory â rate cuts are supposed to be bullish.
So what went wrong?
đŁïž Powellâs Words Changed Everything
In his post-decision press conference, Fed Chair Jerome Powell poured cold water on market optimism.
He emphasized that the 25 bps cut was merely a âpreventive adjustmentâ â not the start of a long easing cycle.
That single statement crushed the marketâs dominant narrative: the expectation of back-to-back rate cuts in October and December.
â The Bullish Narrative Collapsed
Investors had fully priced in a âdouble-cutâ scenario â a rapid easing cycle that would inject liquidity and fuel a broad risk-on rally.
When Powell dismissed that idea, traders rushed to unwind positions, triggering an avalanche of forced liquidations and ETF outflows.
Key fallout:
đŁ $1.1B+ in crypto liquidations, mostly leveraged longs
đȘ Bitcoin ETFs recorded sharp outflows, magnifying downside pressure
đ Altcoins saw double-digit losses as sentiment flipped risk-off
đ„ The Market Reaction: Panic Meets Positioning
The selloff wasnât just emotional â it was mechanical.
With most traders positioned for continued easing, Powellâs hawkish tone caught them off guard.
The result: a cascading wave of margin calls and liquidations, pushing Bitcoin toward the $105Kâ$106K zone, now viewed as critical short-term support.
đ§ What Happens Next?
1. Key Support Zone:
Watch the $BTC Index around $105Kâ$106K â this technical area could act as a near-term rebound zone if selling pressure eases.
2. Institutional Signals:
ETF inflows and outflows are now the top macro indicator for crypto sentiment.
Sustained inflows could mark a turning point; persistent outflows would confirm institutional hesitation.
3. Macro Uncertainty:
Until the government shutdown ends and missing data (like CPI and jobs reports) return, the Fed will remain cautious â meaning volatility stays elevated.
â ïž The Bigger Lesson
In todayâs macro-driven market, a rate cut isnât automatically bullish.
What matters more is the signal behind it.
Powellâs move reminded traders that monetary easing without commitment can actually deflate optimism â not fuel it.
Liquidity expectations drive sentiment, and when those expectations vanish, so do risk appetites.
𧩠Bottom Line
The Fed didnât just cut rates â it cut confidence.
Until data clarity returns and Powell confirms the next move, crypto markets will remain in reactive, volatility-heavy mode.
Stay defensive, manage leverage, and trade whatâs real, not whatâs hoped for. đĄïž
