Bitcoin steadies as positions worth $1.5 billion are liquidated in crypto markets

Bitcoin traded largely stable on Tuesday but extended losses following a massive $1.5 billion wipeout in the digital derivatives market during the previous session, as traders braced for heightened volatility ahead of one of the largest options expiries in the market’s history.

Investors were also awaiting Federal Reserve Chair Jerome Powell’s speech later in the day, which could offer fresh signals on monetary policy direction after last week’s rate cut.

At last check, the world’s largest cryptocurrency was down 0.1% at $112,711.6 by 01:55 a.m. ET (05:55 GMT), hovering near a two-week low.

$1.5 Billion Liquidations… and Powell in Focus

Bitcoin slid more than 3% on Monday, briefly breaking below $112,000 before trimming some of its losses. Data from Coinglass showed that roughly $1.5 billion worth of long positions across crypto markets were liquidated in a single day, marking the largest shakeout in months.

More than 400,000 traders saw their leveraged bets wiped out. Ether dropped as much as 9%, while altcoins like Dogecoin also suffered sharp declines.

Reports indicated the selloff was fueled by overleveraged positions and thin liquidity, which amplified price swings. Losses were further compounded by options traders positioned for outsized market moves.

Massive Options Expiry Ahead

The market now eyes a major expiry of crypto options on Friday. Data from Deribit suggest that over $23 billion worth of Bitcoin and Ether contracts are set to expire, making it one of the largest such events on record.

Fed Policy and Inflation Data in Spotlight

The Federal Reserve remains the central focus this week. Powell’s speech follows remarks on Monday by Governor Stephen Miran, with several other Fed officials also scheduled to speak in the coming days.

The Fed cut interest rates by 25 basis points last week, while its “dot plot” indicated the possibility of two more cuts this year. However, officials emphasized a cautious tone, stressing that inflation remains above target and that the pace of easing will depend on incoming data.

Markets are also awaiting Friday’s release of the core Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge.

Beijing’s Quiet Warning on Tokenization in Hong Kong

Separately, Reuters reported that China’s securities regulator has informally told some mainland brokerages to halt real-world asset (RWA) tokenization activities in Hong Kong, underscoring Beijing’s concerns over the rapid growth of digital products beyond its borders.

The guidance, issued in recent weeks, aimed to ensure such products are backed by genuine businesses and that risk management practices improve.

RWA tokenization involves converting traditional assets such as bonds or real estate into blockchain-based tokens. Hong Kong has been promoting the sector as part of its push to become a global digital finance hub, attracting Chinese brokerages looking to roll out new products.