A decline in bitcoin (BTC) turned into selloffs worth more than $700 million in futures tracking major tokens, and products XRP and dogecoin (DOGE) posted unusually high losses.
BTC fell below $100,000 in late US hours before recovering slightly during early Asian hours on Thursday as the Federal Reserve hinted at some rate cuts in 2025. Fed Chair Jerome Powell , later said in a post-FOMC press conference that the central bank was not allowed to hold bitcoin under current regulations, in response to a question about President-elect Donald Trump’s strategic reserve pledges.
“That’s the kind of thing Congress should consider, but we’re not looking for a law change,” Powell said. In a July campaign, Trump said the government would keep 100% of all bitcoin it currently owns or will acquire in the future under his administration, referring to the stockpile of seized BTC held by the country.
BTC fell 3% after Powell’s comments, leading to a drop in major currencies. Solana’s XRP, dogecoin (DOGE), and SOL fell as much as 5.5%, and BNB Chain’s BNB and ether (ETH) fell 2.5%. Chainlink’s LINK fared the worst with a 10% drop, erasing some gains from earlier in the week when Trump-backed World Liberty Financial bought $2 million worth of tokens.
The market crash led to the liquidation of more than $700 million in bullish bets, with futures tracking smaller altcoins and meme tokens posting bigger losses than BTC or ETH futures in an unusual move, data shows.
A liquidation occurs when an exchange forcibly closes a trader’s leveraged position due to the trader’s inability to meet margin requirements. Large-scale sell-offs can indicate market extremes, such as panic buying or selling.
A cascade of liquidations could suggest a turning point in the market, where a price reversal could be imminent due to an overreaction in market sentiment.
Some traders say Powell’s comment may mark a local high, reducing expectations of a continued rally towards the end of the month.
“Cryptocurrency markets may have peaked if a strategic US Bitcoin reserve is no longer in play, as this pledge helped fuel the rally of recent months to new all-time highs,” shared Nick Ruck, director of LVRG Research, with CoinDesk in a Telegram message. “While an interest rate cut would normally have a bullish reaction as it was largely expected, the market reacted strongly after Federal Reserve Chairman Jerome Powell declared that inflation would be an ongoing problem over the next anus”.
However, traders at Singapore-based QCP Capital remain generally optimistic for the year ahead.
“Don’t be knocked out of your positions if a fall occurs. With 2025 poised to be a potentially bullish year for cryptocurrencies, particularly with Trump in office, staying the course may prove beneficial,” the company said in a message broadcast Thursday.
