Crypto markets posted big declines on Tuesday, but signs of relief from the Federal Reserve helped prices rebound from their worst levels. A late Truth Social post from President Trump reminded bulls that he has the power to reverse rising asset prices at any time.
bitcoin traded as low as $109,800 during the early hours of the US session on Tuesday after falling from nearly the $116,000 level overnight. It has since bounced to $112,600, down 2.8% in the last 24 hours. decreased by 4%, while BNB, XRP, and Dogecoin fell between 4% and 6% during the same period. The CoinDesk 20 broad market index fell 3.2%.
Prices found some footing after Federal Reserve Chair Jerome Powell said the central bank is nearing the end of its quantitative tightening (QT) cycle, the process of reducing its bond holdings. He also noted that the labor market is cooling and risks to employment are increasing, along with some signs of tightening in money markets. The comments come on top of another likely rate cut later this month.
US stock indices responded sharply, with the Nasdaq and S&P 500 reversing early losses and briefly turning green before closing with a loss of 0.75% and 0.15%, respectively.
At least part of the day’s bounce in both cryptocurrencies and stocks was erased a few minutes late in the session after President Trump took to Truth Social to suggest blocking cooking oil imports from China unless that country steps up its soybean purchases.
Miners continue to be offered
Crypto mining stocks once again led digital asset stocks as investors continue to bet that growing demand for computing power from artificial intelligence (AI) will benefit these companies. Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) were each up more than 10% on the day.
Massive flow of leverage favors bitcoin accumulation
While the rebound from last week’s flash crash lost momentum on Tuesday, Vetle Lunde, head of research at K33, sees the current drop as a constructive setup with bitcoin stabilizing after a major leverage reset.
“Following the recent leverage purge, we become constructively bullish on BTC, although patience remains key,” Lunde wrote in a Tuesday note. He noted that liquidity is likely to remain tight in the near term as traders recover from forced selling, but argued that previous outcomes of this type have often marked market lows.
“We ultimately view current levels as attractive to increase spot exposure to BTC as leverage has been violently removed,” he said. “Combined with a supportive backdrop, including expectations of accommodative policies, high institutional demand and pending ETF catalysts, the setup favors gradual accumulation.
