This week hasn’t been a great thing for investors in favor of the market. On Monday we witnessed the biggest crypto liquidation of 2025. So far, thousands of investors have been at a loss.
The long-standing investor advancement on September 21 has wiped out more than $1.65 billion from the crypto, making that date one of the biggest wipeouts in history. Over 95% of the positions that have been wiped out are long, indicating that overexposed bulls are being settled, rather than short squeezes.
Source: Coinglass
With cryptocurrencies, most have fallen into weekly losses since Sunday, with some outliers being avalanches and BNB. Bitcoin is currently facing a 3% decline over the past seven days, but Altcoins like Ethereum and XRP are even seen at tough losses of up to 7%.
What’s even more interesting is that these liquidations occurred just days after the Fed announced new interest rate cuts. So what gives?
Treasury yields rose to two weeks high a day after the FOMC meeting, catching shocking optimists. Perhaps due to Powell’s more careful approach, the market may have responded by relicating long-term risks to strengthen inflation that remained rising and not confirming further interest rate cuts.
As a result, other financial markets also became hits. The S&P 500 fell nearly 2.1% the day after the rate cut, marking its worst day performance since April, but the NASDAQ fell 2.8%, pulling it down to tech stocks that are particularly sensitive to interest rate expectations.
Federal Reserve Chairman Jerome Powell spoke again today, and his remarks may reinforce the narrative that currency easing hasn’t come as easily as it once thought. Powell suggests concern about the stock market’s speculative bubble and may refer to stocks, crypto or elsewhere.
“We look at the overall fiscal situation and ask ourselves whether our policies are affecting our financial situation in the way we are trying to achieve,” Powell said. I said. “But you’re right. For example, many measures make stocks highly valued.”
The topic of whether the stock market is overvalued has been a recurring concern among investors, economists and even central bankers. Powell’s recent remarks – “Stock prices are highly valued” – subtly reinforces that sentiment.
So, on the speculative basis, the Fed’s financial ease may not have provided much relief to investors as it was originally thought.
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Crypto-domino effect
This is more likely to have caused a domino effect in the crypto market as investors reassessed their previous overly optimistic position. With rising yields, investors will offer risk-free alternatives to volatility and invite investors to leave the dangerous market.
Perhaps the most obvious indication of that trend is the fact that Bitcoin domination has skyrocketed upward after a few months of downward trend. The BTC.D hit nearly 59% on September 22nd, reaching its highest level since August 22nd.
When this happens, the most logical interpretation is that investors are moving away from more unstable altcoins and seeking evacuation from Bitcoin as a relatively safe asset. This not only means that AltSeason needs to wait, but also shows a broader shift in feelings from speculative enthusiasm to defensive positioning.
CoinMarketCap’s Fear & Greed Index perfectly illustrates this emotional change. After increasing the market’s happiness in the beginning of September, the market returned to its territory of “terror” and showed signs of investor attention.
Yet fear never lasts forever. To end with a more optimistic memo, institutional adoption continues strongly, and future SEC Crypto ETF decisions may reinforce this concept. Still, as markets become more dependent on macroeconomic updates, future data releases will play a major role in shaping emotions. A careful viewer is the Personal Consumption Expense (PCE) Index, scheduled for later this week.
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