Bitcoin dropped below the critical $60,000 mark this week, reaching its lowest point since October 2024. The sustained sell-off erased more than half of Bitcoin’s value since its peak last year, driven by shifting market expectations that the Federal Reserve will raise interest rates later this year instead of cutting them. After falling over 4% within 24 hours to near $59,030, Bitcoin rebounded slightly to around $61,650 by the close of trading.

The sell-off spilled over across the entire cryptocurrency ecosystem. Ethereum, the second-largest digital currency, slid roughly 3% to about $1,650. Other altcoins such as Solana, BNB, Cardano, XRP, Dogecoin, and Hyperliquid also retreated as risk aversion spread throughout the market.

The rapid decline triggered a massive liquidation event on crypto derivatives exchanges, where leveraged traders faced forced closures of positions. Market tracker CoinGlass reported that over $1 billion in derivative contracts were liquidated within a single day, affecting more than 176,000 traders. Most liquidations involved long positions—bets on rising prices—with nearly $781 million wiped out compared to about $211 million on shorts. This imbalance highlights that many traders were overly optimistic amid an ongoing bearish trend.

Bitcoin-specific contracts accounted for the largest share of liquidations at $417 million. The biggest single liquidation occurred on Binance, where a $12 million Bitcoin swap position was forcefully closed. Ethereum-linked derivatives saw approximately $230 million in liquidations, further reflecting broad market distress.

Data from CryptoQuant revealed that the initial selling pressure originated in the spot market rather than futures. In one minute, over $470 million in Bitcoin sell orders executed on Binance pushed the price below $60,000. Within an hour, sell orders surpassed $1.2 billion. The clustering of sell orders near the $60,000 threshold indicates many investors had set that level as a key exit point, contributing to supply overwhelming demand and accelerating the price fall.

Overall demand remains fragile, with ongoing realized losses and net withdrawals from spot wallets signaling reduced investor appetite. This confluence of factors outlines a market realigning to accommodate tighter Federal Reserve monetary policy expectations and resetting price levels across digital assets.