Bitcoin’s price took a significant downturn, hitting lows of $89,000 during the Asian trading hours, which negatively affected the broader cryptocurrency market. As a result, the total crypto market capitalization plummeted from $3.22 trillion to $3.06 trillion, erasing a staggering $160 billion in value. This decline followed the Federal Reserve’s anticipated decision to cut interest rates by 25 basis points.
Ethereum (ETH) also experienced a sharp decrease, falling nearly 4% to a low of $3,170. Other leading altcoins, including XRP, Solana, BNB, Dogecoin, Cardano, and Zcash, saw declines ranging from 4% to 8%. Concerns over whether the cryptocurrency market could face a more severe crash were amplified by dissenting opinions from the Federal Open Market Committee (FOMC), bearish trends in derivatives markets, and troubling on-chain data.
At the recent FOMC meeting, worries were reignited about the trajectory of the Federal Reserve’s monetary policy. A handful of Fed officials expressed dissent regarding the 25 basis points rate cut. Additionally, the central bank revealed plans to purchase up to $40 billion in treasury bills over the next 30 days, starting this Friday. Fed Chair Jerome Powell indicated a pause in rate cuts as the January 2026 FOMC meeting approaches, projecting only one more rate cut in 2026 after three this year. This hawkish stance placed additional pressure on risk assets, leading to Bitcoin’s decline and raising fears of a potential market crash.
The Fed’s announcement about purchasing T-bills was not classified as quantitative easing, yet it suggests underlying stress in the money market, which has already contributed to rising gold prices. Reports indicate that the Fed is injecting billions into the banking system to alleviate liquidity issues through repo operations, marking the second-largest liquidity injection since the COVID pandemic.
Amid this turbulence, renowned investor Michael Burry pointed out that U.S. banks are showing signs of weakness amid the volatility in the repo market, which could signal another banking crisis.
Analysis from Matrixport suggests that the Bitcoin and cryptocurrency market will likely remain range-bound following the Fed’s decision. Implied volatility across major assets has been trending lower, reflecting decreased expectations for substantial near-term price movements.
The situation intensified further with data from CoinGlass indicating the liquidation of nearly $400 million in long positions in just the last 24 hours, leading to total crypto liquidations exceeding $520 million. Major cryptocurrencies like Bitcoin, Ethereum, Solana, XRP, Dogecoin, and Zcash bore the brunt of these liquidations.
Further analysis of Bitcoin options suggests that traders are increasingly adopting a bearish stance. Open interest in Bitcoin options has risen, while the put/call ratio has tilted towards puts, signaling a trend towards hedging or betting on further declines. There is about $3.56 billion in Bitcoin options set to expire on Friday, with a put/call ratio standing at 1.09. The maximum pain price is located at $90,000, with approximately 83% likelihood of Bitcoin remaining above this strike price at expiration.
Experts have indicated that the prevailing options flows and funding rates are skewed negatively, heightening the likelihood of continued instability and potential further declines.
On-chain indicators also reinforce a grim outlook. The Bitcoin Bull Score Index, a key measure of market sentiment, points to extreme bearishness, having dropped back to 0 in the wake of the Fed’s rate cut. Data on realized losses from on-chain trading shows that bearish sentiment is prevailing over bullish activity. Moreover, the overall risk of liquidation for Bitcoin rebounds has significantly increased. Following the crypto market crash earlier in October, Bitcoin has struggled to overcome selling pressure.
Crypto analyst Ali Martinez noted that historically, some of the best buy-the-dip opportunities arise when on-chain traders realize losses drop below -37%. Currently, the indicator is at -18%, suggesting there is still room for further decline in both Bitcoin and the broader market.
