Cryptocurrency Markets Drop $630M Liquidations Amid Tariff-Fueled Rate-Cut Uncertainty

The cryptocurrency market experienced significant volatility recently, with Bitcoin dropping below $115,000 and a sharp decline in the broader market, including ether and XRP, amid President Donald Trump's tariffs impacting global trade and fueling a stronger U.S. dollar and higher inflation expectations. This economic backdrop has reduced hopes for a Federal Reserve rate cut, leading traders to adopt more cautious and bearish positions, as reflected in a slight increase in short positions on futures exchanges. A major institutional investor demonstrated a strategic repositioning by flipping from short to long positions in Bitcoin and Ethereum, leveraging volatility for potential long-term gains, while Ethereum has seen increased accumulation by smart money, with on-chain data showing significant inflows and growing long-term holder activity. The market also saw over $630 million in leveraged position liquidations, predominantly from longs, highlighting overextended bullish bets and amplifying price swings. Traders are advised to monitor liquidation data, funding rates, and on-chain metrics closely to better gauge market sentiment and potential inflection points.