Do BTC On-Chain Data & Options Signal Another Crypto Market Crash?

The crypto market lost $160 billion when the price of BTC dropped to $89K, alongside Jerome Powell's and the FOMC's hawkish stand, which suggests a significant crypto market crash.

During Asian hours, the price of bitcoin fell to $89K lows, which negatively impacted the whole crypto market. Following the Fed's anticipated 25-basis-point rate cut, the value of the cryptocurrency market fell from $3.22 trillion to $3.06 trillion, representing a $160 billion decline.

The price of ETH drops by about 4% to $3,170. XRP, Solana, BNB, Dogecoin, Cardano, and Zcash were among the other leading altcoins that saw a 4-8% decline. Will FOMC dissent, bearish signals in derivatives markets, and bad on-chain data cause the crypto market to crash?

Powell's and the FOMC's Remarks Shake the BTC & Crypto Market

With several Fed officials opposing a 25-basis-point rate drop, the most recent FOMC meeting rekindled concerns about the direction of the Fed's monetary policy. Additionally, starting this Friday, the Fed announced that it will purchase up to $40 billion worth of Treasury bills over the next 30 days.

Additionally, Fed Chair Jerome Powell announced that the Fed would halt further rate decreases before the January 2026 FOMC meeting. Following three rate cuts this year, the FOMC's monetary outlook indicated that there would only be one 25-basis-point rate drop in 2026. The price of Bitcoin fell to $89K as a result of this hawkish stance on riskier assets, and the crypto market anticipated a crash.

The $40 billion purchase of T-bills, according to the Fed, is not quantitative easing (QE). However, in reality, this indicates that the money market is under stress, which has driven up the price of gold. The Fed is using repo operations to infuse billions of dollars into the financial sector, thereby alleviating liquidity difficulties. Interestingly, since the COVID-19 outbreak, this has been the second-largest liquidity infusion.

According to Mike Burry, the volatility of the repo market is weakening US banks, which portends another banking catastrophe.

Bitcoin and the crypto market are expected to remain range-bound following the Fed's decision, according to Matrixport research. As expectations for significant short-term price fluctuations have decreased, implied volatility has been trending down across the main.

Signals from Derivatives Data Crash of the Crypto Market

CoinGlass data indicates that over $520 million worth of cryptocurrency liquidations occurred in the last 24 hours, with approximately $400 million in long-term holdings being liquidated. The most liquidated coins were BTC, ETH, SOL, XRP, DOGE, and ZEC.

Data on Bitcoin options indicates that traders are becoming more pessimistic. The put/call ratio has moved in favor of puts, despite a spike in open interest in Bitcoin options. It shows that traders are placing bets on additional declines or hedging.

Bitcoin options with a put/call ratio of 1.09 and a notional value of $3.56 billion are scheduled to expire on Friday. There is an 83% chance that Bitcoin will expire over the $90K strike price, which is the maximum pain price. Experts have noted that funding rates and options flows are skewing negatively, increasing the likelihood of ongoing volatility and possible future losses.