“Large clusters of long liquidations can signal capitulation and potential short-term bottoms, while heavy short wipeouts may precede local tops as momentum flips.”, — write: www.coindesk.com
The pullback came just hours after the Federal Reserve delivered a widely expected 25-basis-point rate cut, only for Chair Jerome Powell to dampen optimism with cautious comments suggesting December’s cut isn’t guaranteed.
Liquidations occur when traders using borrowed funds are forced to close their positions because their margin falls below required levels. On crypto futures exchanges, this process is automatic, as when prices move sharply against a leveraged trade, the platform sells the position into the open market to cover losses.
Large clusters of long liquidations can signal capitulation and potential short-term bottoms, while heavy short wipeouts may precede local tops as momentum flips. Traders can also keep track of where liquidation levels are concentrated, helping to identify zones of forced activity that can act as near-term support or resistance.
Data from CoinGlass showed roughly 165,000 traders were liquidated over 24 hours, including an $11 million BTCUSD long on Bybit, the day’s single largest hit. Hyperliquid led all venues with $282 million in liquidations, followed by Bybit’s $223 million and Binance’s $144 million, underscoring how overextended leverage remains in the market.
“While the Fed cut interest rates as expected, Chair Powell’s cautious press conference triggered a sharp sell-off in a ‘sell-the-news’ event after stating that the anticipated December cut is not guaranteed,” said Nick Ruck, director at LVRG Research in a note to CoinDesk. ”
“While short-term volatility persists, the Fed’s pivot to ending quantitative tightening in December signals a bullish undercurrent for risk assets like crypto, positioning Bitcoin and Ethereum for renewed upside as cheaper capital flows in over the coming months,” Ruck added.
Meanwhile, Jeff Mei, COO at BTSE, said the dip reflected “cautious positioning across all markets.”
“Inflation remains above target at 3%, and the Fed has limited room to maneuver until there’s clearer data amid the government shutdown,” Mei said. “With asset prices already elevated, further easing is unlikely unless economic weakness becomes more pronounced.”
The liquidation wave comes just as investors digest improving geopolitical sentiment after the US and China signaled progress toward a new trade agreement.
Despite near-term volatility, analysts say macro conditions are turning more favorable. If liquidity expands in line with the Fed’s timeline, Bitcoin could find firmer footing above $115,000 into November — assuming leveraged traders don’t get caught leaning too hard again.
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Key market dynamic points to potential for heightened market volatility ahead of Friday’s options expiration.
- BTC trades around levels where dealers hold net negative gamma exposure.
- It suggests potential for heightened price volatility ahead of Friday’s options expiration.
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