Bitcoin Tumbles Below $90K Following Fed Decision, Triggering $1.68 Billion Liquidation Cascade
Bitcoin's volatile week took a dramatic turn Thursday, with prices plunging below the $90,000 psychological support level. The sell-off, which accelerated after the Federal Reserve's first interest rate decision of 2026, saw the flagship cryptocurrency briefly touch $81,000 before stabilizing near $87,700. The broader digital asset market followed suit, edging lower in a wave of risk-off sentiment.
The immediate catalyst appeared to be a market overly reliant on leverage. Data from analytics firm CoinGlass reveals that over $1.68 billion in leveraged crypto positions were liquidated within 24 hours, with approximately 267,000 trader accounts affected. Long positions bore the brunt, accounting for roughly 93% of the forced closures. Bitcoin and Ethereum saw combined liquidations exceeding $1.1 billion.
"This wasn't a fundamental breakdown, but a mechanical unwind," noted market analyst Clara Vance of Meridian Capital. "Persistently positive funding rates indicated a crowded long trade. When prices dipped on the Fed news, it triggered a cascade of margin calls. Platforms like Hyperliquid, Bybit, and Binance saw forced selling snowball, creating a feedback loop."
The ripple effects extended beyond spot markets. Publicly traded companies with significant Bitcoin exposure, such as Strategy (formerly MicroStrategy) and Bitmine Immersion Technologies, saw their shares drop nearly 10% during regular trading hours. The sell-off reignited debates about concentration risk and the sustainability of corporate treasury strategies heavily weighted toward a single volatile asset.
While some investors viewed the dip as a buying opportunity, others expressed deeper concerns about market structure and accessibility. "The fear isn't just about price," said retail investor Marcus Chen. "It's that the volatility and high nominal price are creating a barrier to entry. For the next generation, owning a whole Bitcoin is becoming a distant dream, which changes its perceived role from a currency to a purely speculative trophy asset."
User Reactions:
"Finally, a reality check. The 'number go up' machine broke. This was inevitable with so much reckless leverage in the system. Maybe now people will talk about actual utility again." – Alex Rivera, software engineer and long-time crypto skeptic.
"A healthy flush of leverage. This is standard bull market behavior. The Fed's stance was just the pin. The underlying thesis for Bitcoin hasn't changed one bit. I'm using this to average in." – Priya Sharma, portfolio manager at a digital asset fund.
"Are you kidding me? 'Hyperliquid' liquidated $600M? The names are a parody. This whole ecosystem is built on quicksand. They call it 'unwind,' I call it a preview of the collapse when real macroeconomic stress hits." – David Keller, former investment banker and vocal critic of crypto markets.
"The correlation with stocks like Strategy is fascinating. It shows Bitcoin is now firmly embedded in traditional risk asset channels. This isn't 2017 anymore; the contagion works both ways." – Dr. Evelyn Reed, financial sociologist.
Analysts point out that the sharp drop in total open interest alongside the price suggests leverage was purged from the system rather than transferred—a potentially stabilizing factor in the near term. However, with ongoing geopolitical uncertainty and the unpredictable fiscal policy direction under the Trump administration, market participants are bracing for further volatility.
This report includes analysis from CoinGlass, Glassnode, and real-time market data.