Powell’s Fed Warning Sparks $200M Crypto Liquidation Bloodbath—Bulls Reeling

Jerome Powell just dropped a monetary policy bomb—and crypto traders are paying the price. The Fed chair's hawkish warnings triggered a cascade of liquidations, wiping out leveraged positions with brutal efficiency.

The reckoning: Over $200 million evaporated from bullish positions in minutes as Bitcoin and altcoins buckled under Powell's weighty words. Market makers feasted on the carnage—another reminder that liquidity flows uphill on Wall Street.

Silver lining? Veteran traders saw this coming. 'The Fed always plays the villain when markets get frothy,' quipped one hedge fund manager while adjusting his short positions. Meanwhile, retail traders are left holding the bag—again.

This isn't your 2021 bull market anymore. With regulators circling and macro winds shifting, crypto's next rally might need more than just hopium to take flight. But let's be real—when has that ever stopped degens before?

The central bank left interest rates unchanged, with Powell insisting on potential inflationary pressures from tariffs, while two officials dissented in favor of cutting.

Later in the session, BTC bounced back above $117,000, still 0.8% down through the day and trading at the lower end of its three-week tight range. Ether (ETH) slid as much as 3%, then recovered to $3,750, modestly lower (-0.6%) over the past 24 hours.

Altcoins posted steeper declines first, but quickly rebounded. Solana’s SOL (SOL), Avalanche’s AVAX (AVAX) and Hyperliquid’s HYPE tokens were down 4%-5% before paring losses, while BONK and PENGU plunged 10% each before bouncing back.

A check on the traditional market saw Meta (META) and Microsoft (MSFT) posting strong quarterly earnings, lifting the stocks 10% and 6% higher, respectively, after regular trading hours.

"The market is increasingly starting to think the Fed may be behind the curve," Matt Mena, analyst at digital asset issuer 21Shares, said in a market note.

"Last week’s PCE print marked the second soft reading in a row, and consumer spending is weakening," he wrote. "With unemployment edging higher and real yields still restrictive, maintaining such tight policy risks overtightening into a broader slowdown."

The current setup is reminiscent of the last quarter of 2023, Mena said, with "softening inflation, rising political volatility, and a Fed constrained by lagging indicators."

He said "the stage is set" for the Fed to pivot to lower rates, which could drive BTC to $150,000 by year-end.