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Bitcoin traded largely unchanged on Tuesday, extending pressure from a massive $1.5 billion wipe-out in crypto derivatives a day earlier, while investors braced for fresh volatility tied to one of the largest ever options expiries.
Crypto Sell-Off Wipes Out Leverage
The world’s biggest cryptocurrency last slipped 0.1% to $112,711.6 as of 01:55 ET, hovering near two-week lows. On Monday, Bitcoin briefly dropped below $112,000, triggering the liquidation of more than $1.5 billion in long positions across the crypto complex, according to Coinglass data.
Over 400,000 traders were forced out of leveraged bets, with Ether plunging as much as 9% and altcoins such as Dogecoin also suffering double-digit intraday losses. Thin liquidity and overextended positioning magnified price swings, with options-related trades further intensifying the downturn.
Options Expiry Adds to Caution
Traders are now preparing for a $23 billion Bitcoin and Ether options expiry on Friday, one of the largest on record, according to Deribit. The event could inject more volatility as traders rebalance positions.
The Federal Reserve is also in focus, with Chair Jerome Powell set to speak later Tuesday. His remarks could offer more clarity on the policy path after last week’s 25 bps rate cut, which came alongside projections for two more reductions in 2025. While supportive for risk assets, Fed officials have since warned that sticky inflation may slow the pace of easing.
Markets are also awaiting Friday’s U.S. core PCE data, the Fed’s preferred inflation gauge, which could shape the next leg for crypto markets.
China Flags Risks Over Tokenization
Adding to industry caution, Reuters reported that the China Securities Regulatory Commission informally instructed mainland brokerages to halt real-world asset tokenization efforts in Hong Kong. The move, aimed at tightening oversight and ensuring legitimate backing for tokenized products, highlights Beijing’s concern over rapid growth in offshore digital finance.
Altcoins Struggle to Recover
Broader crypto markets remained under pressure Tuesday. Ethereum was down 1.8% at $4,190.4, after Monday’s sharp 9% drop. XRP edged 0.4% higher to $2.87 after hitting a three-week low. Solana fell 3.8%, Cardano dropped 2.2%, and Polygon lost 3%. Among memecoins, Dogecoin slipped 1.7%, while $TRUMP tumbled 5.7%.
