Cryptocurrency markets faced significant downward pressure on Tuesday before rallying modestly following encouraging remarks from Federal Reserve Chair Jerome Powell. Bitcoin (BTC) dipped to an intraday low near $109,800, down from approximately $116,000 overnight, but later rebounded to around $112,600, marking a 2.8% decline over the previous 24 hours.
Other major tokens also experienced losses, with Ether (ETH) falling 4%, and Binance Coin (BNB), XRP, and Dogecoin declining between 4% and 6%. The CoinDesk 20 Index, a broad measure of crypto-assets, slipped by 3.2% during the same timeframe.
The turnaround in prices was largely attributed to Powell’s comments indicating the Federal Reserve is approaching the end of its quantitative tightening phase—a policy involving the reduction of the central bank’s bond holdings. He further noted signs of a cooling labor market and increasing risks to employment, alongside indications of tightening in money markets. These observations contribute to growing market expectations for a potential interest rate cut later this month.
U.S. equities mirrored this sentiment shift, with the Nasdaq and S&P 500 reversing earlier losses to register small gains before closing down 0.75% and 0.15%, respectively.
However, late-session gains were partially reversed following a post on Truth Social by former President Donald Trump. He proposed blocking Chinese imports of cooking oil unless Beijing increases its purchase of U.S. soybeans, injecting renewed uncertainty into the market environment.
In contrast to the broader market, crypto mining stocks performed strongly amid optimism that increased demand for computing power—driven by artificial intelligence advancements—will benefit these firms. Shares in Bitfarms, Cleanspark, Iren, Marathon Digital, and TeraWulf each rose by over 10% during the session.
Meanwhile, Vetle Lunde, head of research at K33, offered a cautiously optimistic outlook on bitcoin following last week’s flash crash and subsequent leverage purge. In a research update, Lunde described the current price dip as a “constructive setup,” noting bitcoin’s stabilization in the aftermath of significant forced liquidations.
“With leverage violently cleared, current bitcoin levels appear attractive for increasing spot exposure,” Lunde stated. He highlighted that liquidity may remain thin in the near term as traders continue to unwind positions but pointed out that previous unwind events have often coincided with market bottoms.
Furthermore, Lunde identified supportive factors underpinning his outlook, including anticipated expansionary monetary policy, elevated institutional interest, and upcoming exchange-traded fund (ETF) catalysts. Taken together, these elements suggest the potential for a gradual accumulation phase going forward.
