Crypto Markets Recover After Sharp Losses Amid Fed Signals and Leverage Reset
Crypto markets experienced a steep drop on Tuesday but managed to rebound from their lows, supported by Federal Reserve cues. A late-day Truth Social post from President Trump reminded investors that geopolitical developments can still influence market sentiment.
Bitcoin (BTC) tumbled from near $116,000 overnight to an early low of $109,800, before bouncing to $112,600, down 2.8% over 24 hours. Ether (ETH) fell 4%, while BNB, XRP, and Dogecoin slid between 4% and 6%. The broader CoinDesk 20 Index dropped 3.2% on the day.
Fed Comments Support Stabilization
The rebound followed Fed Chair Jerome Powell’s remarks that the central bank is nearing the end of its quantitative tightening (QT) cycle. Powell also highlighted a cooling labor market and rising employment risks, signaling that a rate cut later this month remains likely.
U.S. equities mirrored crypto’s recovery, with the Nasdaq and S&P 500 briefly turning positive before closing with modest losses of 0.75% and 0.15%, respectively.
Late-session volatility erased part of the day’s gains after President Trump suggested restricting cooking oil imports from China unless Beijing increases soybean purchases, highlighting ongoing geopolitical uncertainty.
Crypto Miners Lead Gains
Mining stocks outperformed, fueled by expectations of rising demand for AI-related computing power. Shares of Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) each rose more than 10%.
Leverage Flush Creates Accumulation Opportunity
Although the rebound from last week’s flash crash lost some momentum, the pullback is seen as a constructive buying opportunity. Vetle Lunde, head of research at K33, noted that prior leverage purges often coincided with market bottoms.
“After the recent leverage flush, we remain constructively bullish on BTC, though patience is key,” Lunde said. Liquidity is expected to stay thin as traders recover from forced selling. He added that cleared leverage, favorable macro conditions, institutional demand, and pending ETF catalysts create a setup conducive to gradual Bitcoin accumulation.
