Bitcoin’s Leverage Unwind Sets Stage for Buying, According to K33

Crypto Markets Dip Before Rebound as Fed Signals Support BTC Accumulation

Crypto prices fell sharply on Tuesday but recovered from their lows, supported by relief from Federal Reserve signals. A late-day Truth Social post from President Trump reminded investors that geopolitical factors could still sway markets.

Bitcoin (BTC) dropped from near $116,000 overnight to an early low of $109,800 before bouncing to $112,600, down 2.8% over 24 hours. Ether (ETH) fell 4%, while BNB, XRP, and Dogecoin each declined between 4% and 6%. The broader CoinDesk 20 Index lost 3.2%.

Fed Commentary Spurs Stabilization

The rebound followed Fed Chair Jerome Powell’s remarks indicating the central bank is nearing the end of its quantitative tightening (QT) cycle. Powell also noted labor market cooling and rising employment risks, signaling a potential rate cut later this month.

U.S. equities mirrored crypto’s recovery, with the Nasdaq and S&P 500 reversing early losses to briefly trade in the green before closing with modest declines of 0.75% and 0.15%, respectively.

Late-session volatility partially erased gains after President Trump suggested blocking cooking oil imports from China unless Beijing increased soybean purchases, highlighting ongoing geopolitical uncertainty.

Crypto Miners Shine

Mining stocks outperformed, driven by expected demand from AI-related computing needs. Shares of Bitfarms (BITF), Cleanspark (CLSK), Iren (IREN), Marathon Digital (MARA), and TeraWulf (WULF) each surged more than 10% during the session.

Leverage Flush Creates Accumulation Opportunity

Despite losing some momentum from last week’s flash crash, the pullback is seen as a constructive setup for Bitcoin accumulation. Vetle Lunde, head of research at K33, noted that prior leverage purges often coincided with market bottoms.

“After the recent leverage purge, we turn constructively bullish on BTC, though patience is key,” Lunde said. Liquidity remains thin as traders recover from forced selling, but the cleared leverage, combined with supportive macro conditions, institutional demand, and upcoming ETF catalysts, favors gradual accumulation of Bitcoin.