The cryptocurrency market faced a wave of volatility on Wednesday as over $200 million in leveraged positions were liquidated within an hour, triggered by the Federal Reserve’s decision to keep interest rates steady alongside hawkish commentary from Fed Chair Jerome Powell.
Hawkish Fed Remarks Trigger Market Reactions
Although the central bank left interest rates unchanged, Powell’s tone during the press briefing signaled concern about rising inflation, largely attributed to new tariff policies.
“Increased tariffs are pushing up prices,” Powell said, warning that inflation expectations are trending higher.
These remarks swiftly erased earlier market optimism, causing Bitcoin (BTC) to fall below $116,000, and sending shockwaves through the broader crypto market.
Altcoins Tumble Before Recovering
The sudden price drop had a strong impact on altcoins, which saw sharp declines before stabilizing.
- Solana (SOL), Avalanche (AVAX), and HYPE dropped 4% to 5% intraday.
- BONK and PENGU, high-volatility meme coins, plunged 10% before rebounding in the latter part of the session.
These steep moves reflected both panic selling and the forced closure of leveraged long positions as market liquidity tightened.
Liquidations Surge Across the Board
According to derivatives data, more than $200 million worth of leveraged positions were wiped out in less than 60 minutes. The bulk of these were long positions, reflecting trader expectations of a bullish breakout that was quickly reversed.
High leverage across major exchanges amplified the losses, as liquidation thresholds were triggered during the fast decline in BTC and altcoins.
Outlook: Short-Term Pressure, Long-Term Opportunity?
Despite the abrupt sell-off, some analysts suggest that if inflation data begins to cool and the Fed pivots to easing, Bitcoin could potentially reach $150,000 by year-end.
For now, however, traders are expected to remain cautious, especially those using leverage amid a highly reactive macro environment.
Volatility Returns to Crypto
The latest Fed commentary reminds investors of the ongoing interplay between monetary policy and crypto price action.
Until there is more clarity on interest rate direction, crypto markets may continue to experience heightened volatility and frequent liquidation spikes.
Disclaimer
This content is for informational purposes only and does not constitute financial, investment, or legal advice. Cryptocurrency trading involves risk and may result in financial loss.