Bitcoin Plunges 15% as Fed Rate Cut Hopes Fade

Bitcoin’s dramatic reversal from its early-October peak of $126,080 marked a stunning turnaround for the cryptocurrency that had broken records just weeks earlier during what observers had dubbed “Uptober” for its historical tendency toward market gains. By Thursday, Bitcoin had fallen below $108,000, representing a 4% decline over 24 hours and nearly 15% below its all-time high. The sell-off wasn’t isolated to Bitcoin alone—Ethereum, the second-largest digital asset by market capitalization, slid 5% to trade just above $3,782, while other major cryptocurrencies including Solana, XRP, and Dogecoin all dropped approximately 6%.

The cascading effect hit altcoins particularly hard, with many experiencing even steeper declines than Bitcoin. The broader market reaction demonstrated how closely correlated cryptocurrency movements remain, with Bitcoin continuing to serve as the market bellwether. The timing was especially notable given the optimistic sentiment that had characterized the beginning of October, when Bitcoin’s record-breaking performance had suggested continued upward momentum for digital assets.

The primary catalyst for Thursday’s sell-off emerged from the Federal Reserve, where Chair Jerome Powell indicated on Wednesday that further interest rate cuts this year are not a “foregone conclusion.” This represented a significant shift in tone from the central bank, which had cut rates at its previous two meetings. Cryptocurrencies and other risk assets have historically performed well in low-interest rate environments, as cheaper borrowing costs encourage investment in higher-yielding, speculative assets.

Strahinja Savic, head of data and analytics at crypto-focused financial services firm FRNT Financial, explained the market reaction to Decrypt: “The market was expecting a green light to go risk-on. Instead, Powell said that further cuts are not a ‘foregone conclusion.'” The unexpected hawkish turn from the Fed came as particularly disappointing to investors who had positioned themselves for continued monetary accommodation, leading to rapid position adjustments across crypto markets.

Greg Magadini, Director of Derivatives at Amberdata, echoed this assessment, noting that “the world is positioned long across the board going into the Fed meeting. Now it’s like, ‘What’s the next reason for markets to go higher?’—so a sell-off makes sense to me.” The comments from both analysts highlighted how heavily markets had been leaning into expectations of continued Fed support, making the reality check particularly painful for leveraged positions.

Adding to the negative sentiment was market disappointment following President Trump’s highly anticipated meeting with Chinese leader Xi Jinping. Despite Trump characterizing the encounter as “truly great” and “amazing,” and agreeing to lower tariffs on China by 10%, markets reacted with skepticism. The lack of concrete trade breakthroughs or substantial certainty regarding future U.S.-China relations left investors unimpressed, contributing to the risk-off environment.

President Trump’s trade policies have consistently rocked markets since he took office in January, with unexpected tariff announcements frequently causing sharp declines in Bitcoin and other risk-on assets like technology stocks. Even though Trump has positioned himself as crypto-friendly, his trade war tactics have often created volatility that negatively impacts digital assets. The latest meeting’s failure to produce substantial trade resolution despite the tariff reduction suggests ongoing uncertainty in global trade relations that continues to weigh on investor confidence.

The market downturn triggered massive liquidations in crypto futures markets, totaling more than $1.1 billion over the past day. The vast majority of these liquidations came from positions betting on higher prices for Bitcoin and Ethereum, with nearly $500 million from Bitcoin alone and Ethereum contributing more than $250 million to the total. These figures underscore how heavily leveraged the market had become during the recent rally, with many traders positioned for continued gains.

The liquidation cascade represents one of the largest single-day unwinds in recent months, highlighting the vulnerability of highly leveraged positions to sudden shifts in market sentiment. As Savic of FRNT Financial noted, “shorter-term-minded investors are adjusting their positions after not receiving the green light they expected” from both the Fed and the geopolitical developments. The scale of the liquidations suggests that many traders had become overconfident following Bitcoin’s record-breaking performance earlier in the month, leaving them exposed when market conditions abruptly reversed.