Bitcoin Drops 3% as $250M Longs Liquidated Ahead of Fed Rate Cut Bets

Bitcoin extended its decline on Tuesday, slipping 3% in 24 hours to trade near $107,500, as renewed selling pressure swept through the broader crypto market. The drop triggered nearly $250 million in long liquidations, according to Coinglass data, with total market liquidations reaching $320 million.

Top altcoins also mirrored the decline—Ethereum (ETH), Solana (SOL), XRP, and BNB all fell between 3% and 5%, erasing early-week gains despite optimism over the expected end of the U.S. government shutdown.

On-chain data, however, suggests the sell-off may be losing steam. Bitcoin outflows from Binance surged sharply, a sign that traders are transferring holdings off exchanges into cold storage wallets, typically viewed as a bullish signal.

“Exchange outflows indicate that investors aren’t preparing to sell. They’re positioning for accumulation,” said one analyst.

Key Market Highlights:

• Bitcoin trades around $107,500, down 3% on the day
• $250 million in long positions liquidated across exchanges
• Exchange outflows from Binance at highest in over a month
• VIX index down 36% from last week’s peak, signaling easing fear

Crypto analyst Ted Pillows pointed out that the CBOE Volatility Index (VIX) fell another 10% today, its steepest weekly decline in months. A falling VIX often reflects waning market fear, which could set the stage for renewed risk appetite and a potential rebound in Bitcoin.

U.S. Shutdown Nears End

Macroeconomic uncertainty remains the key driver of market sentiment. White House adviser Kevin Hassett said Monday that the U.S. government shutdown is likely to end this week, potentially clearing the way for stalled economic reports and pending crypto regulatory proposals to move forward.

Prediction platform Polymarket also reflects rising optimism, with traders now seeing November 5 as the most likely date for the shutdown to conclude.

Still, geopolitical tensions remain a wild card. Former President Donald Trump has threatened to impose 155% tariffs on Chinese goods if trade negotiations falter, reigniting concerns about global growth and risk appetite.

Markets Brace for Fed Rate Cuts

Investors are now shifting focus to next week’s Federal Reserve policy meeting, where markets are pricing in a 50 basis point rate cut before the end of 2025.

While rate cuts often boost risk assets like crypto, traders remain cautious amid shifting macro signals. Analysts suggest Bitcoin’s recent weakness could represent the final correction before renewed upside momentum — provided macro conditions stabilize and liquidity improves.

With risk appetite slowly recovering and on-chain data pointing toward accumulation, Bitcoin’s path forward may hinge on Fed policy clarity and post-shutdown fiscal direction.