• Fed signals fewer rate cuts ahead, sparking a risk-off wave.
• Trump–Xi talks disappoint, reigniting trade-war fears.
• $800M in leveraged liquidations wipe out $120B in crypto market value.
The crypto market nosedived Wednesday after the Federal Reserve announced a smaller-than-expected rate cut and hinted that future reductions may not be guaranteed. Investors had priced in aggressive easing, expecting multiple cuts through early 2026 — but the Fed’s cautious tone crushed that optimism.
Bitcoin and Ethereum both tumbled as risk sentiment evaporated, dragging the broader market with them. Traders who had positioned for a dovish surprise found themselves caught in a sell-the-news wave that quickly cascaded across the board.
When the central bank signals slower stimulus, liquidity-sensitive assets like crypto tend to suffer first. The result was swift: spot and futures markets saw red within minutes of the Fed’s announcement.
Trump–Xi Summit Fails to Spark Confidence
Markets had also been banking on a confidence boost from the much-hyped meeting between President Donald Trump and Chinese President Xi Jinping. Instead, the talks ended with vague promises and few concrete outcomes.
While China agreed to cut some tariffs and resume limited agricultural imports, investors were hoping for a broader trade truce. The lack of immediate breakthroughs sent a wave of disappointment through global markets — and crypto, once again, bore the brunt of risk-off sentiment.
Analysts say the renewed trade-war anxiety reminded traders just how fragile global demand remains, particularly for tech and blockchain sectors exposed to cross-border flows.
Liquidations Amplify the Crash
Leverage added gasoline to the fire. Within hours of the Fed’s statement, over $800 million in leveraged positions were liquidated across major exchanges. Data from Coinglass showed that more than 165,000 traders were wiped out as prices broke key support zones.
Bitcoin briefly dipped under $110,000, triggering a chain reaction of forced liquidations across altcoins. Ethereum, Solana, and other high-beta assets posted double-digit losses in the same window, as futures funding rates flipped negative.
Overall, crypto’s market capitalization shed over $120 billion in less than eight hours, one of the steepest drops since early 2025.
The Bottom Line
This wasn’t a single-event crash — it was a perfect storm of monetary caution, geopolitical uncertainty, and over-leveraged trading. The Fed’s message of restraint collided with renewed tariff jitters and speculative positioning that simply couldn’t hold.
Until policymakers clarify their stance on future cuts — and Washington and Beijing show real progress — risk assets like crypto are likely to remain under pressure. For now, traders are tightening stops and waiting for the next macro signal before reentering.
