Bitcoin, Ethereum and XRP experienced abrupt declines during a broad market correction driven by shifting expectations for Federal Reserve rate cuts. The sell-off triggered nearly $1 billion in intraday liquidations, briefly pushing Bitcoin below $87,000 on November 20, 2025 — a move that reflected a deeper recalibration of leveraged risk across the crypto market following recent Fed decisions.
Fed Shifts, Leverage Stress and a Fast-Moving Crypto Pullback
The extended downturn erased between $1 trillion and $1.1 trillion in total market value, with major cryptocurrencies posting some of their sharpest weekly losses in months. Bitcoin slipped to around $86,520, falling 13.5% on the week. Ethereum dropped to roughly $2,827 (-15%), while XRP retreated to $2.00, nearly 18% lower over the same period.
Leverage amplified the damage. More than $900 million in leveraged positions were wiped out in a single day, and total liquidations across Bitcoin, Ethereum, XRP and Solana climbed to as much as $1.6 billion in recent sessions. The Fed’s 25 bps cut on October 31 sparked what traders described as a “classic sell-the-news wave”, setting off another $890 million in liquidations as positions unwound rapidly.
A liquidation — the forced closure of a leveraged trade due to insufficient margin — often accelerates price swings, especially when liquidity is thin.
Much of the downturn stemmed from a shift in macro interpretation. A surprise jump in the U.S. unemployment rate to 4.4%, coupled with fading expectations for aggressive Fed cuts, reshaped risk appetite. While some equity traders viewed rising unemployment as a potential catalyst for future cuts, crypto investors reacted differently, exiting risky positions at speed — a reminder that sentiment and capital flows in equities and digital assets don’t always sync.
This event also exposed the fragility of high-leverage strategies, spotlighting how dependent they are on derivatives liquidity and consistent market depth. It further underscored the impact of monetary policy on tokenized assets, ETFs and other crypto-linked financial products. As one trader put it, “This was pure sell-the-news — profits taken, margins hit, and everything cascaded.”
For custodians, managers and compliance teams, the volatility is a warning signal: the market may need tighter margin controls, better exposure limits and stronger liquidity mechanisms across tokenized products and crypto ETFs. In the near term, this pressure could push financing costs higher and slow operational processes during peak volatility.
Looking ahead, the market’s next moves will likely hinge on upcoming macroeconomic data and the Federal Reserve’s next signals. ETF flows, liquidity conditions and the next U.S. employment reports will serve as critical markers for whether the market stabilizes — or slides further.