Crypto Markets Dip Then Rebound Amid Fed Signals and Leverage Flush

Crypto markets saw sharp losses on Tuesday but managed to recover from their worst levels as signs of relief from the Federal Reserve bolstered investor confidence. A late-day Truth Social post from President Trump, however, reminded markets that geopolitical factors can still move prices.

Bitcoin (BTC) fell from nearly $116,000 overnight to a low of $109,800 in early U.S. trading before bouncing to $112,600, marking a 2.8% decline over 24 hours. Ether (ETH) dropped 4%, while BNB, XRP, and Dogecoin slid between 4% and 6%. The broader CoinDesk 20 Index fell 3.2%.

---

Fed Comments Support Rebound

Prices stabilized after Fed Chair Jerome Powell indicated that the central bank is nearing the end of its quantitative tightening (QT) cycle and highlighted cooling in the labor market along with rising employment risks. These remarks suggested that a rate cut later this month remains likely.

U.S. equity markets responded, with the Nasdaq and S&P 500 reversing early losses to briefly turn positive before closing with modest declines of 0.75% and 0.15%, respectively.

Late-session volatility briefly erased part of the bounce after President Trump suggested limiting cooking oil imports from China unless Beijing increases soybean purchases, reminding markets of geopolitical risk.

---

Miners Lead Crypto Equities

Crypto mining stocks outperformed, fueled by expectations of rising demand for computing power from AI applications. Shares of Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) all rose more than 10% on the day.

---

Leverage Flush Creates Bitcoin Accumulation Opportunity

While the rebound from last week’s flash crash lost some momentum, K33’s Vetle Lunde views the current dip as a constructive buying setup.

“After the recent leverage purge, we turn constructively bullish on BTC, though patience remains key,” Lunde wrote. He highlighted that liquidity is likely to stay thin as traders recover from forced selling, but noted that prior leverage unwinds often coincided with market bottoms.

“We see current levels as attractive for increasing spot BTC exposure. With leverage violently cleared and a supportive backdrop—including expansionary policy expectations, strong institutional demand, and pending ETF catalysts—the setup favors gradual accumulation,” Lunde concluded.