Whipsaw Trading: Fed Cut and Tariff Rumors Trigger $800M in Crypto Liquidations
Elena Rossi
October 30, 2025
“The combination of policy uncertainty and options positioning made this one of the choppiest 24-hour stretches since March,” said a derivatives desk head at a major exchange.
Timeline of the Selloff and Rebound
The rout began minutes after the Federal Reserve cut its policy rate band to 3.75%–4.00%. Traders sold the news, sending Bitcoin lower as leveraged longs were forced to liquidate. Within four hours, roughly $520 million in positions vanished, with altcoins like ETH, XRP and DOGE adding another $280 million as cross-exchange spreads widened.
Relief came overnight when reports suggested U.S.–China tariff negotiations were back on track. Bitcoin bounced from $108K to over $110K, leaving funding rates volatile and underscoring the fragility we detailed in our leverage risk coverage earlier this week.
Macro Drivers Behind the Volatility
Chair Jerome Powell emphasized a data-dependent stance, tempering expectations for another cut in December. That hawkish tint, combined with headlines about potential tariff escalations, had traders rotating into cash before risk assets recovered.
Economic desks note that real yields remain elevated, curbing appetite for long-duration crypto bets. ETF flows provide a partial offset—see how inflows returned in our ETF recap—but derivatives markets continue to dictate intraday direction.
Derivatives Metrics Screaming Caution
Perpetual funding swung from +18 bps to -6 bps in under six hours on major venues, while three-month basis briefly inverted. Options dealers report elevated gamma exposure around the $110K strike for Friday’s expiry, amplifying each move through hedging flows.
Skew remains negative, highlighting demand for downside protection. Analysts warn that another macro shock could push realized volatility toward the levels we saw when liquidations last spiked in September.
Price Levels and Flows to Monitor Next
Spot traders are eyeing $108K as near-term support, while $110K–$115K forms a resistance band dominated by whale sell orders. Exchange reserves for BTC ticked lower, hinting at continued self-custody despite the volatility.
Stablecoin inflows to exchanges climbed $600 million overnight, suggesting dip-buying appetite remains. Watch aggregated order-book depth on U.S. venues for clues about institutional participation once the dust settles.
Trading Playbook Heading Into Options Expiry
With a multi-billion-dollar options expiry looming, desks are trimming leverage and leaning on delta-hedged strategies. Some funds are rotating into basis trades, shorting futures while holding spot to capture any re-widening spreads.
Expect choppy conditions until expiries clear and macro guidance stabilizes. Until then, risk managers advise tighter stop-losses and watching treasury yields as closely as price charts.