Bitcoin News Today: Crypto Market Plunges 5% to 10% Amid Geopolitical Fears and Fed Rate Uncertainty

The crypto market is grappling with a sharp sell-off, driven by a confluence of geopolitical uncertainty, leveraged trading activity, and shifting monetary policy expectations. Bitcoin, Ethereum, and other major cryptocurrencies have dropped between 5% and 10% in a single day, with Bitcoin briefly dipping below $115,000 amid renewed concerns over U.S. Federal Reserve policy [1]. This decline marks a significant reversal after a recent rally that saw Ethereum surge nearly 50% and altcoins climb between 50% and 100% in the past two weeks [2].

A key factor fueling the downturn is a high-stakes meeting at the White House involving former U.S. President Donald Trump, Ukrainian President Volodymyr Zelensky, and EU leaders. The meeting focuses on a potential peace deal between Russia and Ukraine, a development that could reshape global market sentiment. While some analysts believe the talks may lead to a resolution, others remain skeptical, and this mixed outlook has contributed to a broader sense of unease among investors [3]. The resulting uncertainty has spilled into the crypto market, where volatility often amplifies reactions to macroeconomic and geopolitical events [4].

In addition to geopolitical risk, leveraged positions on major exchanges are being forcibly liquidated, intensifying the downward pressure. Traders who had entered highly leveraged positions following the recent rally are now being flushed out as prices correct. This process, while painful in the short term, is often seen as a necessary reset in crypto markets, clearing out weak hands before more strategic capital re-enters the space [5]. The scale of these liquidations has been significant, with reports of over $500 million in total losses across major exchanges [6].

The Federal Reserve’s recent update to its rate cut expectations has also played a role in the sell-off. A week ago, the market was nearly certain—98%—that a rate cut would occur in September. However, fresh Producer Price Index (PPI) data has reduced the odds to 84.8%, causing investors to reassess their risk exposure. Although the drop in probability appears small, it is enough to trigger a reaction in a market as sensitive as crypto. The perceived delay in monetary easing has led to a flight to safer assets and a corresponding sell-off in riskier, high-growth assets like Bitcoin and Ethereum [7].

Ethereum and XRP have mirrored Bitcoin’s downward movement, with Ethereum dropping below $4,300 and contributing to a 12% decline in the NFT market’s total value [8]. The interconnected nature of the crypto ecosystem means that a significant price shift in one major token often triggers a synchronized reaction across the entire market. This dynamic underscores the importance of Bitcoin as a bellwether for crypto sentiment [9].

Analysts suggest that today’s downturn may be part of a broader strategic shakeout. Institutional investors are likely viewing the current pullback as an opportunity to re-enter the market at more attractive levels, while retail traders are advised to remain cautious. Historical trends indicate that dips driven by temporary fear and technical corrections can often precede strong rebounds, especially in markets with strong fundamentals and speculative appeal [10].

The broader outlook remains dependent on key developments over the next few days, particularly the outcome of the White House meeting and the Fed’s next policy signal. If the geopolitical uncertainty dissipates and rate cut expectations firm up again, the market could see a rapid rebound. Until then, support levels for the total crypto market cap are being closely watched at $3.81 trillion and $3.89 trillion, with further declines possible if these levels break [11].

Source: [1] Forbes. https://www.forbes.com/sites/digital-assets/2025/08/18/wall-street-issues-serious-66-trillion-crypto-warning-as-price-crash-fears-hit-bitcoin-ethereum-and-xrp/

[2] Barron's. https://www.barrons.com/articles/bitcoin-price-xrp-ethereum-cryptos-75b12cd3

[3] Coinpedia. https://coinpedia.org/price-analysis/why-is-the-crypto-market-down-today-bitcoin-and-ethereum-struggle-as-fed-concerns-rise/

[4] The Economic Times. https://m.economictimes.com/news/international/us/bitcoin-crashes-to-115000-after-record-high-as-500-million-liquidation-shock-hits-crypto/articleshow/123367214.cms?UTM_Campaign=RSS_Feed&UTM_Medium=Referral&UTM_Source=Google_Newsstand

[5] Cointelegraph. https://cointelegraph.com/news/what-happened-in-crypto-today

[6] BeInCrypto. https://beincrypto.com/why-is-the-crypto-market-down-today/

[7] CoinMarketCap. https://coinmarketcap.com/community/articles/68a332fcc5c06c674880b400/