Bitcoin slides sharply as Fed 'rate-cut' hopes vanish…$68,000 level at risk

Expectations spread for an additional 15bp hike by year-end

$330 million of positions liquidated in a day

Bitcoin (BTC) is sliding sharply as expectations for rate cuts from the U.S. Federal Reserve (Fed) have faded and the possibility of additional hikes is being raised instead. The move reflects rate futures markets beginning to price in further tightening amid worries that inflation is becoming entrenched.

According to the crypto industry and CME FedWatch on the 26th (local time), the market is no longer pricing in the possibility of rate cuts this year. Instead, futures prices now reflect the probability of roughly a 15bp rate hike by year-end. Some are even suggesting additional hikes could extend into next year. In effect, the market’s scenario—once centered on rate cuts within the year—has been completely flipped.

As fears of tightening spread, bitcoin fell toward the $68,000 level. In Binance’s Tether (USDT) market on the morning of the day, bitcoin at one point dropped to $68,153. It is currently trading around $68,830, down 3.5% from the previous day. With the Fed pivot nowhere in sight, risk appetite appears to have contracted sharply.

Forced liquidations also followed the abrupt price swing. Over the past 24 hours, a total of $330 million in positions across the bitcoin network were liquidated. Of that, long (bullish) positions accounted for $290 million, or 88% of the total, concentrating the impact of the decline on long positions. Liquidations of short (bearish) positions were limited to $40.08 million.