Macro Uncertainty and Fed Anticipation Drive Crypto's Sharp Correction

Bitcoin, Ethereum, XRP, and Dogecoin plunged on Monday as the cryptocurrency market faced a sharp correction, with over $1.7 billion in liquidations reported in the past 24 hours. According to Coinglass data, 406,492 traders were liquidated, with long positions accounting for $1.61 billion of the total. Prices for major cryptocurrencies fell sharply: Bitcoin dropped to $112,586.72, Ethereum to $4,154.46, XRP to $2.83, and Dogecoin to $0.2378, marking one of the most volatile starts to a week in recent months . Analysts attribute the selloff to a combination of macroeconomic uncertainty ahead of the Federal Reserve’s anticipated rate cut and broader market sentiment shifts.

The downturn follows a period of optimism, with spot Bitcoin ETFs experiencing $222.6 million in net inflows on Friday and Ethereum ETFs adding $47.8 million. However, the recent correction has overshadowed these gains. Michael van de Poppe, a noted crypto analyst, anticipates a short-term bottoming process for Bitcoin, followed by a 1–2 week consolidation phase before resuming upward momentum. Similarly, Ted Pillows highlighted that the market remains sensitive to equities weakness, which could prolong the correction .

Altcoins, particularly XRP, Solana (SOL), and Dogecoin, are expected to face sharper declines. Experts predict a 15–20% correction for these tokens as the market braces for the Fed’s rate decision and the September triple witching event, which historically amplifies volatility. The Altcoin Season Index, which reached 84 earlier this year, has weakened, signaling reduced momentum for smaller cryptocurrencies. Analysts warn that Bitcoin’s dominance could rise to 60% as altcoins underperform .

Market participants are closely watching the interplay between macroeconomic factors and crypto-specific dynamics. The anticipated Fed rate cut has triggered a “sell-the-news” event, with traders locking in profits ahead of potential policy shifts. Additionally, the triple witching of derivatives contracts on September 17 is expected to exacerbate short-term volatility. Pillows noted that Bitcoin could drop 5–8%, while altcoins like XRP and Dogecoin may fall further, driven by speculative unwinding and risk-off sentiment .

Despite the near-term turbulence, long-term optimism persists. Goldman Sachs forecasts three additional Fed rate cuts by year-end, which could stabilize risk appetites and support crypto markets. However, analysts caution that a full altcoin rally is unlikely until late 2025 or early 2026, when macroeconomic conditions improve. For now, the market is navigating a correction phase, with Bitcoin’s resilience—remaining above $112,000—suggesting it may outperform altcoins in the coming months .