Bitcoin’s Leveraged Positions Flush Out, Favoring Buyer Interest: K33

Crypto Markets Rebound After Sharp Losses Amid Fed Signals and Leverage Reset

Crypto markets fell sharply on Tuesday but recovered from their lows, as Federal Reserve signals provided relief to investors. A late-day Truth Social post from President Trump reminded markets that geopolitical developments can still move prices.

Bitcoin (BTC) dropped from nearly $116,000 overnight to an early low of $109,800, before bouncing back to $112,600, down 2.8% over 24 hours. Ether (ETH) declined 4%, while BNB, XRP, and Dogecoin fell between 4% and 6%. The CoinDesk 20 Index lost 3.2% for the day.

Fed Remarks Boost Market Confidence

The rebound followed Fed Chair Jerome Powell’s comments that the central bank is nearing the end of its quantitative tightening (QT) cycle. Powell also noted a cooling labor market and rising employment risks, signaling that a rate cut later this month remains likely.

U.S. equities mirrored crypto’s recovery, with the Nasdaq and S&P 500 briefly turning positive before closing with modest losses of 0.75% and 0.15%, respectively.

Late-session volatility partially erased gains after President Trump suggested blocking cooking oil imports from China unless Beijing increases soybean purchases, highlighting ongoing geopolitical uncertainty.

Mining Stocks Outperform

Crypto mining stocks led the day, driven by expected demand for AI-related computing power. Shares of Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) each surged over 10%.

Leverage Flush Creates Bitcoin Buying Opportunity

Despite some loss of momentum from last week’s flash crash, the pullback is viewed as a constructive accumulation setup. Vetle Lunde, head of research at K33, noted that prior leverage purges often marked market bottoms.

“After the recent leverage flush, we are constructively bullish on BTC, though patience remains key,” Lunde said. He added that liquidity is likely to remain thin as traders recover from forced selling. Cleared leverage, together with favorable macro conditions, institutional demand, and pending ETF catalysts, makes the current environment conducive to gradual Bitcoin accumulation.