Jerome Powell's Speech in Jackson Hole Triggers $900M in Crypto Liquidations

The cryptocurrency market fell following Jerome Powell’s speech at the Jackson Hole symposium. In one day, about $941 million in crypto positions were liquidated, underlining the strong link between digital assets and economic trends.

For many investors, the reversal was unexpected. Just days earlier, markets had been lifted by Powell’s dovish tone, pushing Bitcoin close to $117K. That optimism quickly faded as volatility resurfaced, driving Bitcoin briefly under $110K and forcing leveraged traders into rapid exits.

The Impact of Powell’s Remarks and the Immediate Market Reaction

On August 22, Powell suggested that rate cuts could happen, noting ongoing uncertainty that makes monetary policy difficult. Markets reacted positively at first, seeing this as a sign the Fed might ease its strict approach.

The crypto market surged in response. Bitcoin reached $116,960, just below $117,000. Ethereum moved past $4,600, and the overall market gained over $500 million in hours. Traders welcomed the boost after weeks of slow activity. The rally, however, proved fragile. Heavy inflows into leveraged long positions left the market vulnerable. Once prices began to turn, those trades unraveled quickly, sparking a wave of liquidations on cryptocurrency exchanges.

Within a single day, liquidations reached $826 million, according to CoinGlass. Bitcoin accounted for nearly $277 million of that total, bearing the sharpest impact.

What Do These Liquidations Mean?

Large liquidations usually point to two factors: excessive trader confidence and weak market liquidity. Both were evident this time.

When Bitcoin dropped under $110,000, stop-loss triggers and margin calls set off a chain reaction. Each forced sale drove the price down further, which in turn caused more liquidations. This pattern is familiar from traditional futures markets, but it tends to be more severe in crypto because leverage levels are higher. Some exchanges still allow traders to borrow 50 to 100 times their capital, leaving them vulnerable to even small moves.

The losses were significant. The global crypto market cap fell by $200 billion, sliding from $4 trillion to about $3.7 trillion. Bitcoin now sits at $110,600 with little sign of recovery. Ethereum is holding slightly firmer at $4,531, though it still shows a 2% daily decline.

The message is clear: high leverage multiplies risk. It is a well-known warning, yet markets keep repeating the same cycle.

The Impact on the Crypto Market

Recent liquidations highlight the delicate balance between traditional markets and crypto. Powell’s remarks at Jackson Hole were about inflation and interest rates, but crypto reacted faster and more sharply than stocks or bonds.

Crypto markets respond instantly to global signals, yet their volatility and leverage make them prone to steep corrections.

Hedge funds using Bitcoin as a macro hedge are usually less affected, but retail traders take the brunt of losses. Analysts on Crypto Twitter say this kind of instability may slow new investment unless the market steadies.

Volatility also creates opportunity. Past sell-offs have allowed long-term investors to accumulate at lower levels. This time, the outcome depends on the Fed’s next steps and Bitcoin’s ability to stay above $110,000.

Is More Volatility Ahead?

Jerome Powell’s speech at Jackson Hole caused one of the biggest crypto sell-offs in months. Early hopes for rate cuts quickly turned into a reminder of how unpredictable the market can be, especially with so much leverage in play.

While some traders might find opportunities in these dips, the market overall is still reacting strongly to global events. Bitcoin and Ethereum’s next moves will depend on the Fed’s future guidance, so volatility is likely to continue.