The global cryptocurrency market faced a harsh decline this week following the Federal Reserve’s decision to bring down interest rates once again this year. This signalled growing concerns about slowing economic growth and repetitive structural fragilities within the US economy.
Despite the overall expectations that a rate cut would give a major boost to such risk assets as Bitcoin and Ethereum, the market reaction was totally opposite – the two largest cryptos began to sell off aggressively, mirroring a broader loss of confidence among financial institutions and traders about near-term prospects for crypto.
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Bitcoin crashes as Fed cuts interest rates
Earlier this week, by Thursday, Bitcoin had collapsed to approximately $106,500, showing an 8.24% decline from a recent intra-day high of $116,000. Ethereum followed suit, going down significantly – from $4,326 to the $3,668 level over the same period of time. This massive correction erased billions of dollars worth of crypto assets across the market in just 48 hours as investor sentiment shifted from market euphoria to caution. This was their reaction to the Federal Reserve making another round of monetary policy easing, which came not from economic strength but from fear of market instability going deeper.
Market experts and analysts widely interpreted the 25 basis-point rate cut announced by the Fed Chair Jerome Powell as a defensive step in the current economic situation. The Fed cited low employment data, the continuing decline in manufacturing output, and tightening credit conditions as reasons that pushed it towards cutting the rates. Economists believe that this move is a sign that the US economy may face a stagnating stage of inflation – a so-called stagflation risk. In these conditions, Bitcoin, Ethereum, and other cryptos that had been surging throughout 2025 thanks to large liquidity and ETF inflows, suddenly experienced large selling pressure.
As the selloff started, open interest across various exchanges went down substantially since a large amount of leveraged longs were closed. Liquidations faced by the market amounted to hundreds of millions of dollars within just hours of the rate cut announcement by the Federal Reserve. Unlike during previous rate cuts seen this year, Bitcoin and Ethereum, the assets initially seen as hedges against inflation and monetary policy uncertainty, this time are behaving like high-beta risk assets and are sharply falling in price.
Bitcoin, Ethereum ETFs face sharp liquidity outflows
Recent analytics data on spot exchange-traded funds (ETFs) has confirmed massive outflows from cryptocurrency-based markets. On Friday last week, Bitcoin spot ETFs recorded net losses of 4,970 Bitcoins worth roughly $543.59 million. The largest outflow was suffered by BlackRock’s IBIT, as 2,724 BTC(representing $297.93 million) were withdrawn from it.
Currently, this fund holds a total of 802,811 Bitcoins valued at roughly $87.81 billion. Simultaneously, Ethereum ETFs registered outflows of -54,799 ETH in net outflows worth $210.43 million. This proves that financial institutions, which were quite supportive of BTC and ETH earlier this year as somewhat experimental, are now taking to defensive positions. However, treasury companies, such as Saylor’s Strategy and Tom Lee’s Bitmine, continue to accumulate Bitcoin and Ethereum, correspondingly, despite the massive market crash, showing their firm long-term belief in these crypto assets’ economic potential.
Satoshi’s Bitcoin fortune shrinks by billions
As the crypto bloodbath unleashed earlier this week, the fortune of the mysterious Bitcoin creator, Satoshi Nakamoto, suddenly shrank, losing mammoth $5 billion worth of BTC in just a single day.
Before the market decline, the Bitcoin stash held across Satoshi’s wallets constituted $120 billion in BTC. This happened on Halloween, just when the Bitcoin white paper, released in 2008, turned 17 years old.
Satoshi’s Bitcoin stash has stayed untouched since December 2010, when the enigmatic creator of Bitcoin said goodbye to the early BTC community and disappeared from public view. The amount of Bitcoin held by his wallets totals 1,096 BTC. Following the tremendous market liquidations, his net worth, which had surpassed that of Bill Gates before that, shrank by billions of dollars.
Many analysts believe that the current market rebound is natural after months of inflows into both Bitcoin and Ethereum spot ETFs, which made the markets overheated. Such periods of rallies are often followed by big market corrections, as history shows.
By now, Bitcoin has managed to recover a little and is back above $110,000, while Ethereum is changing hands at $3,860 per coin.
