Crypto Markets Rebound After Sharp Losses Amid Fed Signals and Leverage Reset
Crypto markets tumbled on Tuesday before recovering from their lows, supported by Federal Reserve signals and easing market fears. A late-day Truth Social post from President Trump, however, reminded investors of the potential for geopolitical disruptions.
Bitcoin (BTC) slid from overnight highs near $116,000 to an early U.S. session low of $109,800, before bouncing to $112,600, marking a 2.8% drop over 24 hours. Ether (ETH) fell 4%, while BNB, XRP, and Dogecoin declined between 4% and 6%. The CoinDesk 20 Index lost 3.2% on the day.
Fed Comments Support Stabilization
The rebound followed Fed Chair Jerome Powell’s remarks suggesting that the central bank is approaching the end of its quantitative tightening (QT) cycle. Powell also noted cooling labor market conditions and rising employment risks, pointing toward a potential rate cut later this month.
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 gains after President Trump proposed limiting cooking oil imports from China unless Beijing boosts soybean purchases, underscoring ongoing geopolitical uncertainty.
Mining Stocks Lead Gains
Crypto mining stocks outperformed, fueled by expectations of rising demand for AI-driven computing power. Shares of Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) each jumped over 10%.
Leverage Flush Creates Bitcoin Buying Opportunity
Although the rebound from last week’s flash crash lost some momentum, the pullback is viewed as a constructive setup for accumulation. Vetle Lunde, head of research at K33, noted that prior leverage purges often coincided with market bottoms.
“After the recent leverage flush, we are constructively bullish on BTC, though patience is key,” Lunde said. Liquidity is expected to remain thin as traders recover from forced selling. He added that cleared leverage, along with favorable macro conditions, institutional demand, and upcoming ETF catalysts, creates an environment conducive to gradual Bitcoin accumulation.
