$700M in Liquidations as Price Drops Below Key Level

TLDR

Bitcoin dropped below $100,000, triggering $700 million in liquidations across crypto futures markets, with XRP and DOGE seeing unusually high losses of around 5.5%
The decline followed Fed Chair Powell’s comments that the central bank cannot legally own Bitcoin, responding to Trump’s campaign promise about strategic reserves
The crypto market slide occurred after the Federal Reserve indicated potential rate cuts in 2025
Chainlink (LINK) experienced the steepest decline at 10%, despite recent gains from a $2 million purchase by World Liberty Financial
Market analysts are divided, with some seeing this as a potential local top while others maintain bullish outlook for 2025

Bitcoin dropped below the $100,000 mark during late U.S. trading hours on Wednesday, triggering a wave of liquidations across cryptocurrency markets and leading to substantial losses for leveraged traders.

The price movement came in response to Federal Reserve Chair Jerome Powell’s statements during a post-FOMC press conference, where he addressed questions about cryptocurrency holdings and potential rate cuts in 2025.

Data from market tracking platforms showed that the price decline resulted in more than $700 million worth of liquidations in futures contracts across major cryptocurrencies. The market reaction was particularly notable in the altcoin sector, where smaller tokens experienced larger percentage drops than market leaders.

XRP and Dogecoin futures markets recorded unusually high liquidation volumes, with both cryptocurrencies falling approximately 5.5% during the sell-off. This marked a departure from typical market behavior, where Bitcoin and Ethereum futures usually account for the majority of liquidation events.

The catalyst for the market movement appeared to be Powell’s response to questions about President-elect Donald Trump’s campaign promises regarding Bitcoin strategic reserves. Powell stated clearly that under current regulations, the Federal Reserve is not permitted to own Bitcoin.

“That’s the kind of thing that Congress should consider, but we are not looking for a law change,” Powell explained during the press conference. This statement appeared to dampen market enthusiasm that had built up following Trump’s July campaign statement about maintaining government Bitcoin holdings.

Chainlink’s LINK token emerged as the day’s biggest loser, dropping 10% and erasing recent gains that had followed World Liberty Financial’s $2 million token purchase. The sharp decline highlighted the volatile nature of smaller market cap cryptocurrencies during broader market corrections.

Market data indicated that BNB Chain’s BNB token and Ethereum both declined by approximately 2.5%, showing more resilience than their smaller counterparts during the market turbulence.

Trading volumes spiked during the sell-off, with exchanges reporting increased activity across spot and derivatives markets. The high volume suggested active participation from both retail and institutional traders during the price movement.

The Federal Reserve’s hints at potential rate cuts in 2025 would typically be considered positive news for cryptocurrency markets, but Powell’s specific comments about Bitcoin holdings appeared to overshadow the broader monetary policy outlook.

Nick Ruck, director at LVRG Research, shared his analysis via Telegram:

“Crypto markets may have entered a peak if a U.S. Bitcoin strategic reserve is no longer in play, as this promise helped to fuel the recent months’ rally to new all-time highs.”

Ruck also noted that while interest rate cuts typically generate positive market reactions, the market’s focus remained fixed on Powell’s comments about continued inflation concerns throughout the next year.

However, not all market participants viewed the correction as a longer-term concern. Singapore-based QCP Capital maintained an optimistic outlook in their Thursday broadcast message, advising traders: “Don’t get shaken out of your positions if a drop occurs.”

The trading firm pointed to potential positive catalysts in 2025, particularly citing the possibility of a Trump presidency as a factor that could benefit cryptocurrency markets.

Technical analysts noted that the $100,000 level had served as a psychological barrier for Bitcoin, and its breach triggered automated selling pressure from trading algorithms and stop-loss orders.

The liquidation cascade affected leveraged positions across multiple exchanges, with data showing that long positions were hit particularly hard during the market movement.

Trading activity remained elevated in Asian market hours as traders adjusted their positions and assessed the market impact of Powell’s statements.