Weekly Recap: Crypto Between Risk and Recalibration

Here’s the key point up front: Fast drawdowns often happen when several macro and market structure forces hit at the same time. Shifting expectations around US monetary policy, signs of cooling in the US economy, pressure on tech equities, geopolitical headlines and leveraged liquidations all played a role. Below, we break down what’s been driving the move, what it can mean and what we’ll be watching.

What happened in markets

Bitcoin dropped below the mid-€50k range this week, with Ethereum also seeing a sharp decline. Market reports also pointed to more than $700 million in liquidations over the span of just a few hours, showing that leverage significantly intensified the move lower. At the same time, tech equities slid for multiple sessions, reinforcing the broader “risk-off” tone across global markets.

The main drivers behind the downturn

US monetary policy uncertainty

Markets are highly sensitive to expectations around the future path of interest rates. This week, focus shifted to US monetary policy after news that Kevin Warsh has been nominated to chair the US Federal Reserve, as Jerome Powell’s term is expected to run until May 2026.

Why does that matter for crypto? When investors expect rates to stay higher for longer, or uncertainty increases, high-volatility assets like crypto often reprice lower first. Even without an immediate policy change, a leadership transition can prompt investors to reduce risk and reassess positions later.

Importantly, early market takes can be mixed: some observers frame Warsh as hawkish, while others argue the reality may be more nuanced.

Treasury politics

Two related themes tend to matter for risk assets:

a) Bond yields and flight-to-safety flows.

When fear rises, investors often buy US Treasuries, pushing yields down, classic “risk-off” behavior. That dynamic showed up alongside softer US labour-market signals and falling equities.

b) Government funding and issuance expectations.

Treasury auctions and funding plans can influence liquidity conditions. This week included fresh US Treasury communications around refunding operations and issuance.

Separately, debt-ceiling mechanics can add uncertainty to the market’s assumptions about near-term Treasury cash management and issuance timing.

In plain English: When expectations around rates and liquidity shift, risk assets tend to move with them, and crypto often behaves like a higher-volatility version of tech.

Tech stocks under pressure

This week’s crypto move didn’t happen in isolation, as markets also digested a broader sell-off in equities led by technology stocks. There were two common threads in market commentary:

Earnings- and guidance-driven volatility in major tech stocks has put investors on edge, particularly around expectations for margins, capital expenditure, and future growth. This has fed into a broader narrative about the rising cost of the AI boom, and what that means for profitability and overall risk appetite.

Why this matters for crypto: in “risk-off” periods, correlations often rise. Investors reduce exposure across the board: tech, growth, and crypto together, even when the long-term fundamentals behind those assets are different.

Geopolitics

Geopolitical risk doesn’t need to escalate dramatically to affect markets. Sometimes it’s enough that headlines increase uncertainty and push investors toward safety.

This week, markets also watched upcoming US–Iran nuclear talks, with oil markets balancing easing supply concerns against the reality that the two sides remain divided on scope and agenda.

Liquidations

If macro factors and geopolitics set the backdrop, liquidations are often what turn a weak session into a sharp drop.

Reports flagged over $700 million in liquidations over a few hours, which is typically associated with leverage being forcibly unwound as prices fall through key levels.

One of the most important things to remember during crypto drawdowns is this:

• Spot selling can be gradual.
• Forced selling (liquidations) is fast and can overshoot.

This doesn’t cause the initial weakness, but it can make the move feel sudden and emotionally intense.

Putting it together

This week’s downturn is best described as a broad shift into risk-off positioning: Investors re-priced macro uncertainty, reduced exposure to volatile assets, tech weakened, and crypto’s leverage component amplified the move.

What to watch next

These are the categories that matter most over the coming days:

1. Fed transition and confirmation narrative

Hearing headlines, policy signals, and any clarity on priorities.

2. US growth and labour data

Recent data points (including January layoff announcements) have added to slowdown concerns.

3. Equity market stability (especially tech)

If tech finds a floor, crypto often calms down too. Not always immediately, but correlations tend to ease when volatility drops.

4. Geopolitical headlines

These can shift risk sentiment quickly even without a “definitive” outcome.

5. Leverage metrics in crypto markets

Funding rates, open interest, and liquidation prints can indicate whether forced selling is fading or still ongoing.

What matters when markets get volatile

Market volatility is when users should feel confident that the platform they use prioritises resilience and security.

At Bitpanda, we focus on fundamentals that matter regardless of price moves:

• Asset protection and custody practices, including the use of cold storage and security measures designed to protect customer assets.
• Security standards, including ISO 27001 certification referenced across Bitpanda security communications.
• A regulated, Europe-based operating model, with licensing and compliance frameworks described in Bitpanda’s public materials.

Read more about how Bitpanda protects user assets and maintains high security standards on our Security page.

Practical reminders for investors

Not everyone wants “trader talk.” Here are the most useful, non-hype reminders during drawdowns:

• Avoid making decisions purely off a single day’s candles. Today’s move is rarely “the whole story”.
• Be cautious with leverage. Liquidations are a major reason crypto drawdowns feel extreme.
• Re-check your time horizon. If your thesis is long-term, short-term volatility is the price of admission.
• Use position sizing that lets you sleep. The best strategy is the one you can stick with emotionally.
• If you’re unsure, do less — not more. In risk-off phases, patience is a position.

Closing thought

This week wasn’t driven by a single factor. It was a convergence: policy uncertainty, weaker risk appetite, tech weakness, geopolitical noise, and leverage unwinding. All funnelled into the same outcome: risk-off positioning.

We’ll continue to monitor the macro backdrop and market structure signals closely and we’ll keep focusing on what matters most in volatile moments: clear information, secure infrastructure, and a platform built for the long run.

If you want to stay up to date without the noise, you can read the Bitpanda weekly recap each week for clear updates on crypto markets and the wider macro picture.

Disclaimer

This article is distributed for informational purposes, and it is not to be construed as an offer or recommendation. It does not constitute and cannot replace investment advice.
Bitpanda does not make any representations or warranties as to the accuracy and completeness of any information contained herein.
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