FOMC jitters trigger $700M crypto liquidations

TLDR

Around $700 million of mostly long crypto futures positions were liquidated as BTC, ETH, XRP and other majors sold off on pre-FOMC rate jitters, erasing about $80 billion in value.

1. Bitcoin (BTC), Ethereum (ETH) and XRP led a sharp drop ahead of the Federal Reserve decision, with around $700 million in liquidations and roughly $80 billion wiped from crypto market cap.
2. Liquidations were concentrated in leveraged longs, especially on BTC and ETH, yet total derivatives open interest remains high, meaning leverage was reduced but not fully cleared.
3. The FOMC decision and tone, plus sentiment gauges like Fear & Greed, will determine whether this flush is a short-term reset or the start of a deeper risk-off phase.

Deep Dive

1. What Happened In The Selloff

A broad intraday crypto selloff on 28 July saw Bitcoin (BTC) drop from around $65,600 to a ten-day low near $63,000, with ETH sliding from about $1,980 to below $1,900 and XRP losing more than 4 percent, as major altcoins including SOL declined too. According to one detailed recap, this move triggered about $700 million in liquidations as BTC, ETH and XRP plunged ahead of the FOMC, and roughly $80 billion exited the crypto market.

The key driver cited across coverage is uncertainty about the upcoming Federal Reserve interest-rate decision, with investors de-risking from speculative assets while they wait to see whether the Fed reinforces a higher for longer rate path or surprises with hawkish guidance. This came alongside sharp drops in Asian equities and semiconductor stocks, reinforcing the idea that crypto is trading as a high-beta risk asset into a tense macro week.

Confidence: high because multiple independent reports and aggregate market metrics show similar liquidation totals and link them to the Fed meeting.

2. Leverage Flush, But Not A Clean Reset

Derivatives data show the move was a classic leverage clear-out rather than spot-only selling. One analysis reports $326.71 million in forced liquidations over 24 hours, about 87 percent from long positions, with ETH seeing around $142.40 million liquidated and BTC about $78.73 million, plus notable hits in thinner altcoins. Other venues and time slices lift the combined figure toward the $700 million headline.

Despite this, systemwide leverage remains elevated. Aggregate open interest in crypto derivatives is around $400.29 billion, up about 3 percent over 24 hours, and perpetuals open interest is about $398.25 billion, also higher in the same window. Total crypto market cap fell from roughly 2.23 trillion dollars to 2.17 trillion dollars, a drop of about 2.75 percent, while BTC dominance stayed near 58.6 percent, indicating broad risk-off rather than a pure altcoin capitulation.

3. What To Watch Around The FOMC

Macro context is crowded. Analysts highlight that the next 72 hours bring a Fed decision, PCE inflation and major tech earnings, a cluster that can move stocks, bonds, currencies and cryptocurrencies at the same time and reprice risk quickly across assets (macro calendar overview). The Fed is widely expected to hold rates, but commentary from banks such as DBS and UOB stresses that policy remains restrictive and the risk of further tightening is non-trivial.

Sentiment has weakened notably: CoinMarketCaps Crypto Fear and Greed Index has dropped to 35, solidly in fear territory, consistent with investors cutting risk and moving toward stablecoins. On-chain and derivatives traders will be watching BTC support zones near the recent lows, funding rates, and whether open interest starts to fall meaningfully after the decision.

Conclusion

The $700 million liquidation spike reflects leveraged traders being caught wrong-footed as macro uncertainty around the FOMC pushes investors to de-risk from crypto. Leverage and open interest remain high, so this looks more like a partial reset than a completed washout. Over the coming days, the Feds tone, key economic prints and sentiment indicators will shape whether this episode becomes a short-lived shakeout or the start of a more sustained risk-off regime for digital assets.