Bitcoin News Today: Fragile Leverage Exposed as Bitcoin's $110k Rebound Fails to Calm $817M Liquidations

Bitcoin's price plunged to nearly $108,000 on Wednesday before rebounding above $110,000 by Thursday, triggering a wave of leveraged futures liquidations totaling $817 million. The volatile swing came in the wake of the Federal Reserve's 25-basis-point rate cut, which was quickly tempered by Chair Jerome Powell's cautious remarks, casting uncertainty over the central bank's future policy trajectory. The sell-off, dubbed a "sell-the-news" event by analysts, highlighted the fragility of leveraged positions in the crypto market and underscored the sector's sensitivity to macroeconomic signals, according to a CoinDesk report.

The Fed's widely anticipated rate cut failed to spark sustained optimism as Powell hinted that the December rate reduction is not guaranteed, dampening market sentiment. This triggered a sharp selloff, with long-position traders accounting for the majority of liquidations. Data from CoinGlass revealed that over 165,000 traders were forced to close positions within 24 hours, including a $11 million BTCUSD long on Bybit—the largest single liquidation of the day. Hyperliquid, Bybit, and Binance reported $282 million, $223 million, and $144 million in liquidations respectively, reflecting the widespread overleveraging in the market, the CoinDesk article noted.

Liquidations in leveraged trading occur when positions are automatically closed due to insufficient margin, often amplifying price swings. Analysts noted that heavy clusters of long liquidations can signal short-term capitulation and potential market bottoms, while short squeezes may indicate near-term tops. "The Fed's pivot to ending quantitative tightening in December signals a bullish undercurrent for risk assets like crypto," said Nick Ruck, director at LVRG Research, adding that cheaper capital flows could support Bitcoin's recovery above $115,000 by November if liquidity aligns with the Fed's timeline, the report added.

Jeff Mei, COO at BTSE, emphasized the cautious positioning across markets, pointing to inflation remaining above the Fed's 2% target and limited policy flexibility amid the government shutdown. "Asset prices are already elevated, and further easing is unlikely unless economic weakness becomes pronounced," he stated. Meanwhile, geopolitical optimism surged after the U.S. and China signaled progress toward a new trade accord, offering a potential tailwind for risk-on assets, the CoinDesk article observed.

Despite near-term turbulence, macroeconomic conditions are gradually improving. Analysts argue that Bitcoin's resilience hinges on liquidity expansion and reduced leverage. "If liquidity expands as expected, Bitcoin could find firmer footing above $115,000," Ruck said, cautioning that leveraged traders must avoid overexposure to avoid repeating recent losses, the CoinDesk report concluded.