Federal Reserve Chairman Jerome Powell’s Speech Sends Bearish Signals to Crypto Market
The crypto market has been experiencing a significant downturn, with approximately $300 million in liquidations and Bitcoin’s price dropping below $108,000. This bearish trend was triggered by Federal Reserve Chairman Jerome Powell’s speech during the mid-week FOMC meeting. According to Binance founder Changpeng Zhao, also known as CZ, "many dips are coming along the way."
The Impact of Powell’s Speech on Global Markets
Powell’s speech announced a 0.25 percentage point reduction to the key lending rate, which is now between 3.75% and 4%. This decision was expected to fuel optimism in risk assets like Bitcoin, but it had the opposite effect. Two members of the Fed’s committee dissented from the decision, with Kansas City Fed President Jeffrey Schmid voting to hold rates steady and Stephen Miran pushing for a deeper 0.5% point cut.
Bitcoin’s Price Plunge
Bitcoin led the market selloff, plunging under $107,000 on Thursday in one of its steepest weekly slumps in months. The crypto hit a low of $106,993 before slightly recovering above $107,300 and moving slowly above $109,000 early Friday morning. According to market enthusiast Immortal Crypto, 2025’s October is Bitcoin’s worst-performing "Uptober" in the last 7 years, with prices dropping 6.8% overall.
On-Chain Data Analysis
On-chain data from Binance revealed that the bulk of Bitcoin’s Thursday selloff came from short-term holders, not long-term investors. Over 10,000 BTC flowed into Binance wallets during the volatility spike, a signal of incoming sell orders that could prolong a bearish phase. CryptoQuant analyst CryptoOnChain noted that almost all of that Bitcoin came from coins held for less than 24 hours, which is the signature of "hot money" or fast-moving speculative capital.
Long-Term Holders Remain Unfazed
Long-term holders, also referred to as "diamond hands," showed little activity when short-term traders were selling to stop the bleeding. Coins aged over six months were reportedly largely unmoved, and the data points to a "shakeout of weak hands" rather than the start of a structural downturn. CryptoOnChain surmised that the underlying structure remains strong, and this was a textbook shakeout of weak hands, not a loss of conviction from long-term players.
Trump’s Tariff Threats Exacerbate Market Volatility
October has been a painful month for the broader crypto market, with a much larger market crash taking place on October 10. Bitcoin lost more than $19 billion in open positions during what analytics firm CoinGlass coined as the largest liquidation event on record. This crash coincided with US President Donald Trump’s announcement threatening a 100% tariff on Chinese goods, causing Bitcoin’s market capitalization to drop by more than $200 million, with prices falling nearly 10%.
Retail Traders’ Selling Activity
According to CryptoQuant, citing data from Binance, retail traders sold another 9,200 BTC on Wednesday, equivalent to about $1 billion at the time. Short-term traders using leverage are seemingly rushing to exit during downturns while long-term investors quietly accumulate. Binance’s Retail Traders Daily Buy/Sell chart has shown repeated spikes in selling activity throughout October, each corresponding with intraday drops in Bitcoin’s price.
Conclusion
In conclusion, the crypto market is experiencing a significant downturn, with Bitcoin’s price dropping below $108,000. The bearish trend was triggered by Federal Reserve Chairman Jerome Powell’s speech, and it is expected to continue with "many dips along the way." On-chain data analysis reveals that long-term holders remain unfazed, while short-term traders are rushing to exit during downturns. The rise in the scarcity index could mean whales and long-term holders are withdrawing Bitcoin from Binance to private wallets, which could limit future downside pressure and take the market sentiment to neutral levels. As the market continues to experience volatility, it is essential for investors to remain informed and adapt to the changing landscape.
