Powell’s Hawkish Tone Sends Bitcoin Under $116K, $200M in Crypto Liquidations

Crypto markets faced heightened volatility Wednesday after U.S. Federal Reserve Chair Jerome Powell’s hawkish remarks sparked mass liquidations across digital assets. According to CoinGlass, over $200 million in leveraged positions were wiped out within an hour as Bitcoin (BTC) briefly plunged below $116,000.

The Fed kept interest rates steady but warned of potential inflationary pressures tied to tariffs, with two officials dissenting in favor of cuts. Powell’s comments rattled traders, driving sharp sell-offs in major cryptocurrencies. Bitcoin later rebounded above $117,000 but remained 0.8% lower on the day, continuing to trade near the bottom of its three-week range.

Ether (ETH) dropped as much as 3% to $3,750 before recovering slightly, while altcoins saw even steeper intraday declines. Solana (SOL), Avalanche (AVAX) and Hyperliquid (HYPE) fell 4%-5% before bouncing back. Meme tokens BONK and PENGU plunged nearly 10% each before recouping losses.

Traditional markets moved in the opposite direction, with Meta (META) and Microsoft (MSFT) soaring 10% and 6% after reporting strong quarterly earnings.

Analyst Matt Mena of 21Shares noted that weakening consumer spending, softening inflation data and rising unemployment may soon force the Fed to pivot toward rate cuts. He likened current conditions to late 2023, when similar macroeconomic dynamics preceded a crypto rally, adding that Bitcoin could potentially surge to $150,000 by year-end if policy shifts materialize.

This market turbulence underscores the close correlation between crypto price action and U.S. monetary policy, as traders remain highly sensitive to signals from the Federal Reserve.