The bitcoin (BTC) crash resulted in liquidations of more than $700 million in futures contracts tracking primary tokens, and XRP and dogecoin (DOGE) products posted unusually high losses.
BTC fell under $100,000 in late U.S. hours before slightly recovering during early Asian hours Thursday, as the Federal Reserve hinted at a few rate cuts in 2025. Fed chair Jerome Powell then said at a post-FOMC press conference that the central bank wasn’t allowed to own bitcoin under current regulations — in response to a question about President-elect Donald Trump’s strategic reserve promises.
“This is the kind of thing that Congress considers, but we’re not looking to replace the law,” Powell said. During an election campaign in July, Trump said that the government would keep under its management one hundred percent of all bitcoins it currently owns or acquires, referring to the seized BTC reserves held across the country.
BTC fell 3% following Powell’s comments, causing a drop among the majors. Solana’s XRP, dogecoin (DOGE), and SOL fell 5. 5%, while BNB Chain’s BNB and ether (ETH) fell 2. 5%. Chainlink’s LINK fared worse with a 10% drop, erasing some gains from the previous week, when Trump-backed World Liberty Financial bought $2 million in tokens.
The market slide led to over $700 million in bullish bets liquidated, with futures tracking smaller altcoins and meme tokens recording higher losses than BTC or ETH futures in an unusual move, data shows.
A liquidation when an exchange forcibly closes a trader’s leveraged position due to the trader’s inability to meet margin requirements. Large-scale liquidations can mean market extremes, such as panic buying or selling.
A cascade of sell-offs could suggest a turning point in the market, where a price reversal could be imminent due to an overreaction in market sentiment.
Some investors say Powell’s comment could simply mark a local high, reducing expectations of a continued rally towards the end of the month.
“Cryptocurrency markets would likely have peaked if a US strategic reserve of Bitcoin was no longer in play, as this promise has helped fuel the rally of recent months towards new all-time highs,” shared Nick Ruck, director of LVRG Research. with CoinDesk in a telegram message. “Although an interest rate cut would normally have a bullish reaction as it was widely expected, the market reacted strongly after Federal Reserve Chairman Jerome Powell said inflation would be a persistent challenge next year.
Traders at Singapore-based QCP Capital, however, remain generally bullish for the coming year.
“Don’t be shaken if you fall. With 2025 shaping up to be a potentially bullish year for cryptocurrencies, especially with Trump in office, staying the course may prove beneficial,” the company said in a message posted Thursday.