Crypto markets posted sharp declines on Tuesday, but signs of relief from the Federal Reserve helped prices rebound from their worst levels. A recent post by President Trump on Truth Social reminded bulls that he has the power to reverse rising asset prices at any time.
Bitcoin was trading as low as $109,800 early in Tuesday’s U.S. session, after falling from the near $116,000 level overnight. It has since rebounded to $112,600, down 2.8% in the past 24 hours. fell by 4%, while BNB, XRP and Dogecoin fell between 4% and 6% during the same period. The broader CoinDesk 20 index fell 3.2%.
Prices regained some balance after Fed Chairman Jerome Powell said the central bank was nearing the end of its quantitative tightening (QT) cycle, the process of reducing its bond holdings. He also noted that the labor market was cooling and employment risks were increasing, coupled with some signs of tightening in money markets. The comments come on top of another likely rate cut later this month.
US stock indices reacted strongly, with the Nasdaq and S&P 500 reversing early losses to briefly turn green before closing with a loss of 0.75% and a loss of 0.15%, respectively.
At least part of the day’s rally in crypto and stocks was erased minutes late in the session after President Trump took to Truth Social to suggest blocking cooking oil imports from China unless that country steps up its soybean purchases.
Miners continue to be tendered
Cryptocurrency mining stocks have once again dominated digital asset stocks as investors continue to bet that growing demand for computing power from artificial intelligence (AI) will benefit these companies. Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) each jumped more than 10% on the day.
Massive Leverage Promotes Bitcoin Accumulation
While the rebound from last week’s flash crash lost momentum on Tuesday, Vetle Lunde, head of research at K33, sees the current decline as a constructive setup with bitcoin stabilizing after a major leverage reset.
“After the recent leverage purge, we are becoming constructively bullish on BTC, although patience remains key,” Lunde wrote in a Tuesday note. He noted that liquidity would likely remain low in the near term as traders recover from forced selling, but argued that earlier unwinds of this type often marked market lows.
“We finally view current levels as attractive to increase spot exposure to BTC, as leverage has been violently removed,” he said. “Combined with a favorable backdrop, including expansionary policy expectations, high institutional demand and pending ETF catalysts, the setup favors gradual accumulation.
