Bitcoin slid sharply on Friday, sinking to its lowest level in over two months as leveraged positions were forcibly closed and investors assessed potential shifts in U.S. Federal Reserve leadership. By 02:15 ET (07:15 GMT) the worlds largest cryptocurrency was trading 6.4% lower at $82,620.3. In the prior 24 hours it had fallen as low as $81,201.5, approaching levels seen in April had losses persisted.
Data compiled by CoinGlass indicated that roughly $1.68 billion in leveraged crypto positions were wiped out during the sell-off. Approximately 93% of those liquidations were long positions - traders who had bet on higher prices - and some 270,000 individual traders saw positions forcibly closed. Such automated margin liquidations can accelerate price moves, amplifying volatility as exchanges shut positions that no longer meet collateral requirements.
The market downturn coincided with intensifying debate over the leadership of the U.S. central bank. President Donald Trump said he would announce his pick to replace Federal Reserve Chair Jerome Powell on Friday morning, and reports indicated the White House is preparing to nominate former Fed governor Kevin Warsh for the job. Those reports have increased market speculation that the incoming chair could favor a tighter approach to the Feds balance sheet and monetary policy direction.
Market participants priced in a broader risk-off stance amid those headlines. Financial conditions moved in a way consistent with reduced risk appetite - the dollar strengthened and yields rose - while cryptocurrencies and other risk assets came under renewed selling pressure. Policy direction at the central bank influences interest rates, liquidity conditions, and risk-asset pricing - all factors that affect high-beta assets such as Bitcoin.
Most major altcoins also saw meaningful declines on Friday amid the liquidation-driven move. Ethereum, the second-largest cryptocurrency by market capitalization, fell more than 7% to $2,749.92. XRP dropped roughly 7% to $1.75. Solana eased about 6.5%, Cardano declined about 8%, and Polygon slipped over 5%.
Meme tokens and smaller digital assets were impacted as well: Dogecoin lost about 6% and the token listed as $TRUMP retreated about 3.5% during the same period.
Liquidations occur when exchanges automatically close leveraged positions that cannot meet their margin requirements as prices move against traders. In rapidly moving markets, these forced closures can compound downward price pressure, especially when a large share of volume is concentrated in leveraged long positions.
Fridays combination of heavy liquidations and heightened uncertainty over the Fed leadership created a difficult backdrop for risk assets. Traders managing leveraged exposure and market participants sensitive to changes in liquidity conditions were among those most directly affected.
Key takeaways
- Bitcoin dropped to about $82,620, trading 6.4% lower by 02:15 ET (07:15 GMT), with a 24-hour low of $81,201.5.
- CoinGlass reported roughly $1.68 billion in leveraged liquidations over 24 hours, with about 93% of liquidated positions being longs and some 270,000 traders affected - impacting leveraged crypto traders and exchanges that facilitate margin trading.
- Reports that President Donald Trump would announce a Fed chair pick and that Kevin Warsh is being prepared as a nominee heightened market concerns about a potentially tighter Fed balance sheet, affecting liquidity-sensitive assets such as cryptocurrencies and other risk-on instruments.
Risks and uncertainties
- Uncertainty over the Federal Reserves leadership and policy direction - this could influence interest rates, liquidity conditions, and pricing across risk assets, including cryptocurrencies and equities.
- Ongoing forced liquidations of leveraged crypto positions - these can amplify volatility and pressure prices further, particularly when a large share of positions are longs.
- Broader market risk-off moves - dollar strength and rising yields have coincided with renewed selling in digital assets, posing downside risk for high-beta instruments tied to liquidity and sentiment.
Disclosure
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