Bitcoin’s price swung violently in the hours following the latest U.S. inflation reading, wiping out more than half a billion dollars in leveraged crypto bets and underscoring just how fragile sentiment remains around the $90,000 mark.
The move came after a softer-than-expected Consumer Price Index (CPI) report appeared to set the stage for a renewed rally. Headline inflation printed at 2.7% year-on-year, with core CPI (which strips out food and energy) at 2.6%. Both figures came in under the 3% consensus forecasts, bolstering hopes that the Federal Reserve will have room to ease monetary policy later this year.
Traders initially interpreted the data as a green light for risk assets. Bitcoin ripped higher on the news, briefly approaching the psychologically important $90,000 level and putting a fresh all‑time high back within reach. But the euphoria was short-lived. A wave of selling hit shortly after the spike, erasing those gains within hours and leaving leveraged traders on the wrong side of the move.
Data from derivatives analytics platforms shows that roughly $575 million in crypto positions were liquidated over a 24‑hour window, as both bulls and bears were punished by the rapid reversals. Of that total, about $368 million came from long positions as overconfident traders were caught off guard by the sharp pullback following the CPI‑driven surge.
Bitcoin was at the center of the storm. The leading cryptocurrency accounted for approximately $202 million of total liquidations, with around $119 million of that tally coming from liquidated long positions. Traders who had piled in expecting a straightforward “CPI beat → Fed pivot → risk-on rally” narrative found themselves facing forced closures as margin calls kicked in.
This latest whipsaw differed in character from an earlier episode just a day prior. On Wednesday, spot selling was the primary driver of Bitcoin’s downside, as investors locked in profits and reduced exposure into macro uncertainty. By contrast, Thursday’s retracement was heavily shaped by derivatives activity—profit-taking from highly leveraged traders, rapid unwinding of crowded positions, and algorithmic strategies reacting to shifting volatility.
At the macro level, the CPI surprise was not the only factor in play. Markets were also digesting a notable shift from the Bank of Japan, which recently raised interest rates, chipping away at one of the foundations of the so‑called yen carry trade. For years, global investors borrowed cheaply in yen to deploy capital into higher‑yielding assets elsewhere, including U.S. bonds, equities, and increasingly, crypto. Higher Japanese rates threaten to make that trade less attractive and could prompt capital repatriation, adding an extra layer of instability to risk markets.
As the cost of funding in yen rises, some institutional players are reassessing leverage and trimming risk across their portfolios. That can translate into sudden de‑risking in crypto, particularly in highly levered derivatives markets where even moderate position changes can trigger outsized price moves. The resulting feedback loop—forced liquidations begetting more liquidations—helps explain why Bitcoin’s price can swing thousands of dollars in either direction within a single session.
The post‑CPI action once again highlighted how sensitive Bitcoin has become to macroeconomic data. Inflation prints, employment numbers, and central bank statements increasingly act as catalysts for large, short‑lived spikes in volatility. In effect, Bitcoin is trading more like a high‑beta macro asset, with traders keenly tuned to every hint about the future path of interest rates and liquidity.
For many leveraged participants, this environment has become a minefield. In the run‑up to the CPI release, funding rates on perpetual futures were elevated, signaling aggressive bullish positioning. Longs were essentially paying a premium to maintain their leverage, confident that a benign inflation surprise would send prices higher. When that initial move higher failed to hold and reversed instead, those same traders faced cascading liquidations as collateral values fell and exchanges automatically closed positions to cover losses.
Short sellers did not emerge unscathed either. The first leg of the post‑CPI rally forced many bears to cover at a loss or get liquidated as Bitcoin raced toward $90,000. Then, as the market reversed, late‑arriving shorts again found themselves vulnerable to rapid bounces. This “double‑sided” pain is characteristic of a market dominated by leveraged speculation, where price discovery can be less about long‑term fundamentals and more about which side of the trade is more crowded at any given moment.
Behind the headline liquidation numbers lies a broader structural issue: the dominance of derivatives over spot trading in crypto. Open interest in Bitcoin futures and perpetual swaps has grown dramatically, and in many sessions, derivatives volumes far exceed spot volumes on major exchanges. That imbalance allows relatively small spot flows—or even just the anticipation of them—to be amplified into large derivatives‑driven swings.
The proximity to the $90,000 level added another wrinkle. Round numbers tend to act as psychological magnets and battlegrounds, where options hedging, stop orders, and take‑profit levels cluster. As Bitcoin approached that zone after the CPI data, many traders likely tightened stops or placed fresh orders, adding to the order book fragility. Once selling pressure appeared, it had an easier time slicing through these levels, accelerating the move as automated triggers fired.
Longer‑term investors, especially those with a low time preference, may view episodes like this as noise. On‑chain data in recent months has suggested that a large portion of Bitcoin remains in the hands of long‑term holders who have historically been slow to react to short‑term volatility. For them, CPI‑driven spikes and Bank of Japan policy moves may be relevant at the margin, but they do not fundamentally change the narrative of Bitcoin as a scarce digital asset.
However, for active traders and new entrants, the lesson is more immediate: leverage cuts both ways. Tools such as high‑multiple perpetual futures, margin accounts, and options can boost returns in trending markets but can just as easily magnify losses during whipsaws. Managing position size, setting realistic leverage levels, and understanding liquidation mechanics are increasingly essential skills in this market environment.
Risk management practices often overlooked in bull runs suddenly become critical during days like these. Using lower leverage, diversifying across timeframes, and avoiding heavy concentration near major event releases such as CPI, Federal Reserve meetings, or central bank surprises can help reduce the odds of forced liquidations. Some traders also opt to reduce positions or hedge exposure in the hours leading up to key macro data to sidestep exactly the kind of volatility that unfolded here.
The interplay between global monetary policy and digital assets is likely to intensify from here. As central banks juggle inflation control with growth concerns, every shift in tone—whether from the Federal Reserve, the European Central Bank, or the Bank of Japan—filters quickly into crypto pricing. Bitcoin’s role as both an alternative asset and a speculative macro trade means its path will continue to be shaped by forces far beyond the boundaries of the crypto industry itself.
Going forward, markets will closely watch whether Bitcoin can convincingly reclaim and hold levels near $90,000 without triggering another cascade of liquidations. A period of consolidation with lower leverage could help stabilize price action and allow fundamentals—such as institutional adoption, ETF inflows, and on‑chain activity—to reassert themselves over short‑term speculative flows.
Until then, the latest post‑CPI shakeout stands as another reminder of the current phase of the cycle: one where macro headlines, derivative positioning, and shifting global interest rate regimes combine to produce sudden and often brutal swings. For seasoned participants, it is familiar territory. For newcomers lured in by headlines of record highs, it is a harsh introduction to the reality that in Bitcoin, as in all highly leveraged markets, volatility is not a bug—it is a feature.