Crypto Record Bounce: How Fed Policy Sparked $700M in Liquidations and Triggered an Altcoin Rally

The crypto market just witnessed a dramatic swing that’s rewriting the record books. After Bitcoin tumbled below the $100,000 barrier in late U.S. trading, the landscape shifted dramatically during early Asian hours on Thursday. What started as a coordinated sell-off morphed into a sharp technical recovery, with multiple altcoins now posting unexpected gains that signal deeper market dynamics at play.

At the heart of this crypto record reversal lies a single moment: Federal Reserve Chair Jerome Powell’s comments on Bitcoin ownership restrictions. During a post-FOMC press conference, Powell stated that current regulations prevent the Fed from holding Bitcoin—a direct response to President-elect Donald Trump’s campaign promise to build a strategic Bitcoin reserve. “That’s the kind of thing that Congress should consider, but we are not looking for a law change,” Powell said, immediately sending shockwaves through trading desks worldwide.

The Liquidation Cascade That Shook the Crypto Record

The initial price action was brutal. BTC dropped 3% immediately following Powell’s remarks, cascading into what analysts are calling a crypto record-breaking liquidation event. According to CoinGlass data, over $700 million in bullish bets were forcefully liquidated across major futures contracts—an unusually high figure that points to panic-driven margin calls.

The damage extended far beyond Bitcoin. XRP, Dogecoin (DOGE), and Solana (SOL) initially plummeted as much as 5.5%, while Ethereum (ETH) and BNB each fell 2.5%. Chainlink (LINK) suffered the worst crypto record decline with a 10% drop, erasing gains from earlier in the week when World Liberty Financial—backed by Trump allies—purchased $2 million worth of the tokens. The pattern revealed something critical: smaller altcoins and meme token futures recorded disproportionately higher losses than major cryptocurrencies, suggesting overleveraged retail positioning in riskier assets.

Decoding the $700M Liquidation: Why Size Matters

Understanding this crypto record-setting liquidation event requires grasping what happens when leverage unwinds. A liquidation occurs when an exchange forcefully closes a trader’s leveraged position due to margin requirement violations. Large-scale liquidations like the $700 million event often indicate market extremes—either irrational panic selling or forced buying from automated systems. In this case, the cascade suggested leveraged longs had crowded into altcoins expecting continued rallies, making them vulnerable to sudden reversals.

Nick Ruck, director at LVRG Research, told CoinDesk that Powell’s comment may mark a local crypto record top for the current rally: “Crypto markets may have entered a peak if a U.S. Bitcoin strategic reserve is no longer in play, as this promise helped fuel the recent months’ rally to new all-time highs. Although an interest rate cut would normally have a bullish reaction since it was largely expected, the market strongly reacted after Fed Chair Jerome Powell stated that inflation would be a continuing problem throughout the next year.”

The Technical Bounce and Resistance Levels to Watch

Here’s where the crypto record story takes a turn. Within hours, Bitcoin executed a sharp short squeeze that jolted the entire altcoin complex back to life. By early Thursday evening, BTC had climbed back toward $68,500 territory—well above its lows—while altcoins staged a coordinated recovery:

• Ethereum (ETH): +8.35%
• Cardano (ADA): +10.80%
• Solana (SOL): +6.75%
• Dogecoin (DOGE): +8.15%
• Chainlink (LINK): +8.82%
• Ripple (XRP): +5.62%
• BNB: +5.47%

This sharp technical bounce appears driven primarily by leveraged short-covering and thin liquidity rather than new fundamental catalysts. LMAX Group’s Joel Kruger cautioned that the rebound’s durability remains questionable: the move represents overleveraged traders covering positions, not conviction-driven capital flows.

Crucially, traders at Singapore-based QCP Capital remain constructive on the longer-term crypto record: “Don’t get shaken out of your positions if a drop occurs. With 2025 poised to be a potentially bullish year for crypto, particularly with Trump in office, staying the course may prove beneficial,” the firm noted. Joshua Lim from FalconX observed that some funds are opportunistically rotating into volatile altcoins and options during the weakness, suggesting selective bottom-fishing behavior.

For Bitcoin to signal a resumption of the structural uptrend, key resistance levels around $72,000 and $78,000 must be broken on a sustained basis. A failure to hold above these levels would suggest the bounce is merely tactical, not the start of a new crypto record rally leg.

Dividing Lines: The Bullish Case vs. Rising Uncertainty

The crypto record narrative now hinges on which force proves stronger: the Trump administration’s crypto-friendly policies (which fueled the recent rally toward all-time highs) or persistent inflation concerns that could delay Federal Reserve rate cuts. Powell’s regulatory comments about Bitcoin ownership have introduced an unexpected variable into what traders had assumed was a straightforward policy tailwind.

The liquidation event itself carries mixed signals. Yes, $700 million in forced closures is substantial. But the subsequent sharp rebound suggests this was a capitulation flush rather than a reversal of the underlying bull structure. If true, the next crypto record could be written higher—provided Bitcoin holds above its key technical anchors and macro headwinds don’t intensify.