The cryptocurrency market tumbled sharply on Tuesday following the Federal Reserve’s widely anticipated interest rate cut, with Bitcoin (BTC) sliding to around $111,000 from a weekly high near $116,500. The total market capitalization of all digital assets fell to roughly $3.76 trillion as traders unwound bullish positions across major tokens.
Fed rate cut triggers ‘sell the news’ reaction
The Federal Reserve, led by Chair Jerome Powell, reduced its benchmark interest rate by 25 basis points to a range of 3.75%–4.00%—its lowest level since 2022. While rate cuts typically fuel risk-on sentiment across financial markets, the crypto sector reacted in the opposite direction as investors chose to lock in profits after weeks of gains.
This move reflects a classic “buy the rumor, sell the news” scenario, where markets that had rallied in anticipation of policy easing turn lower once the decision is confirmed. Analysts noted that the cut was fully priced in, leaving little room for further upside momentum in risk assets such as cryptocurrencies.
Adding to the cautious tone, sentiment soured after the meeting between US President Donald Trump and China’s President Xi Jinping at the APEC Summit. Although both leaders signaled progress toward a trade deal and resumed agricultural purchases, investors opted to reduce exposure to high-risk assets amid broader uncertainty.
Liquidations surge as leverage unwinds
The selloff was intensified by a spike in leveraged position liquidations. According to data from CoinGlass, total crypto liquidations surged 75% over the past 24 hours to approximately $554 million, wiping out positions for over 146,000 traders. Bitcoin and Ethereum led the wave, accounting for the majority of the losses.
The sharp move revived memories of the $20 billion liquidation event earlier this month, when excessive leverage triggered a cascade of forced selling. At the same time, futures open interest dropped to $164 billion, down from $228 billion earlier in October—signaling that traders are cutting back on speculative exposure.
Market breadth turns negative
Across the broader market, most altcoins traded deep in the red. Tokens such as Aster, Story, Cronos, and Conflux fell more than 5%, underperforming major assets. Data also showed a subtle bearish tilt in market positioning, with 51% of traders holding short positions versus 49% long across top exchanges.
Analysts warn that the current correction could persist in the near term as markets digest the Fed’s cautious tone and ongoing geopolitical developments. However, with policy now in an easing phase and liquidity conditions improving, longer-term sentiment toward digital assets remains broadly constructive.
