Recent remarks from Federal Reserve officials have spurred a rebound in risk assets, with Bitcoin reclaiming the $80,000 level and major crypto assets rising in tandem. As prices surged rapidly, a wave of concentrated short positions were liquidated, leading to massive liquidations across the crypto market over the past 24 hours.
Bitcoin rises back above $80,000
As of publication, Bitcoin rose to approximately $80,270, nearing a 3% gain over the past 24 hours. Ethereum approached $2,500, while XRP and BNB also advanced, with XRP posting a daily gain of about 6%.
This rally is not limited to the crypto market. U.S. stocks also strengthened, with the Dow Jones Industrial Average rising 453 points, and both the S&P 500 and Nasdaq indices climbing nearly 1%. The overall increase in market risk appetite has driven a synchronized rebound in crypto assets.
The Federal Reserve signaled a reduction in expectations for rate hikes.
The direct catalyst for the market's recovery came from Federal Reserve Governor Waller. According to his pre-recorded remarks at the Reuters event, if subsequent inflation data continue to improve, he is inclined to support maintaining the current benchmark interest rate.
CME FedWatch data shows that, following this statement, the market's probability of an interest rate hike at the September 15–16 meeting fell to 50.4%, down from 63.2% the previous day. Meanwhile, the U.S. 10-year Treasury yield declined to approximately 4.73%.
Maintaining interest rates unchanged typically means that the appeal of cash and bonds relative to other assets will not continue to rise, and it also eases pressure on risk assets from a stronger dollar. As a result, traders interpreted this statement as a bullish signal for stocks and crypto assets.
Short covering amplifies the upward momentum
CoinGlass data shows that over $500 million in crypto positions were liquidated in the past 24 hours, with approximately $416 million in short liquidations and $92 million in long liquidations, affecting over 119,000 traders.
Among this, short liquidations within the last hour exceeded $329 million, with Bitcoin-related short positions alone accounting for approximately $86 million. The price rise forced short sellers to cover their positions, further driving up the market—a classic example of a short squeeze.
The market is focused on the non-farm payrolls data.
Next, market focus will shift to the upcoming August employment report from the U.S. Bureau of Labor Statistics, the last major economic data release before the Fed’s September interest rate meeting.
If employment data continues to weaken, it could further influence market expectations regarding the interest rate path. Previously, a single month's employment data falling short of expectations significantly lowered the probability of rate hikes, demonstrating that macroeconomic data remains a key trigger for short-term market volatility.