5 Things Driving Bitcoin This Week After a Record $1B Liquidation

• Bitcoin slid to $112,000 with $1.7 billion liquidated, mostly from overexposed long positions.
• Speculation over US political news and Fed rate cuts adds weight to market uncertainty.

Bitcoin began the week under pressure after a sudden weekend drop pushed the price to $112,000. The fall of nearly $3,000 erased confidence and led traders to face the harshest liquidations of 2025 so far. According to CoinGlass, total losses crossed $1.7 billion, with $1.62 billion wiped out from long positions alone.

On-chain analysis showed traders had been most exposed around $113,000, leaving the market open to cascading liquidations. Commentator Daan Crypto Trades estimated that $2 billion of open interest vanished, describing the scene as “a big wipe out across the board.”

Ted Pillows, an investor watching liquidity levels, said conditions might worsen before improving. He noted, 

Fed Watch Adds Pressure to Traders

Market volatility is now mixing with expectations from the US central bank. Jerome Powell, head of the Federal Reserve, will deliver a speech today in Rhode Island, and his comments may define sentiment across risk assets.

Investors are focused on the Personal Consumption Expenditures index for August, set for release this week. CME Group data signals confidence in another 0.25% cut at the Fed’s October 29 meeting. Yet Mosaic Asset Company said unity is missing among policymakers. 

The company wrote, 

Out of 19 officials, seven did not support further cuts, citing inflation pressures and labor market weakness.

Rumors of US Bitcoin Reserve Fuel Speculation

Speculation of a US government announcement on Bitcoin added a political dimension to the sell-off. Reports suggest “massive political news” tied to digital assets will surface Tuesday.

Dennis Porter of the Satoshi Fund claimed the decision could “reshape the trajectory of Bitcoin politics.” That remark fueled debate over whether the Strategic Bitcoin Reserve might finally become policy.

Galaxy Digital’s Alex Thorn argued earlier this month that markets had “underpriced” the chance of such a reserve being formalized. Last week, Michael Saylor and other executives met with US lawmakers to talk about the proposed SBR rules.

Support Battle Splits Traders

Traders remain divided on whether Bitcoin’s drop is a false alarm or the start of a broader decline. Jelle, a market analyst, said the $112,000 level was “very clean” and described a push back to $116,000 as essential before aiming for $120,000.

Others view the situation differently. Captain Faibik pointed back to a warning he gave in August, saying that late buyers could end up trapped, a prediction he feels has now been confirmed, with Bitcoin down about 13% since then. He also predicted that the price might still drop further, possibly toward the $100,000 level.

At the same time, uncertainty has deepened as gold and US stock indexes reach record highs. WhalePanda remarked that despite $890 million in ETF inflows and new corporate purchases, Bitcoin’s weekly result stayed flat, raising questions about its momentum compared with traditional markets.

Profit Signals Suggest Pre-Euphoria Stage

Beyond short-term pressure, CryptoQuant analysis suggests the market may be topping out. By comparing market value to realized value among long-term and short-term holders, the contributor Crazzyblockk labeled it “pre-euphoria,” a stage. He said, 

Analyst Crazzyblockk said the market has been in this phase since the 2022 bottom. He noted that the MVRV difference is trending higher but hasn’t hit the levels usually seen at market tops. In his view, that leaves room for more upside, with the peak of this cycle still to come.