The cryptocurrency market faced renewed selling pressure on June 18 as investors digested the Federal Reserve's hawkish policy decision and a continued rally in equities. Bitcoin slipped below $65,000, dragging the total crypto market capitalization down 3% to $2.2 trillion.
Liquidations Spike as Leveraged Positions Unwind
The downturn triggered a sharp increase in forced selling. Liquidations across centralized exchanges jumped 65% in the past 24 hours to approximately $500 million, according to data from Coinglass. Bitcoin longs accounted for $161 million of that total, while Ethereum positions saw $123 million wiped out. Other tokens, including XRP and Zcash, also experienced significant liquidation events.
The surge in liquidations coincided with a 3.9% decline in futures open interest, which fell to just over $107 billion, signaling that leveraged traders are reducing exposure amid heightened uncertainty.
Fed's Hawkish Tone Weighs on Risk Assets
The Federal Reserve, led by Kevin Warsh, left interest rates unchanged as widely expected but signaled the possibility of further rate hikes later this year. The central bank cited persistent inflation, with the latest headline CPI and PPI readings coming in at 4.2% and 6.5%, respectively—well above the 2% target.
Historically, crypto assets tend to underperform when the Fed adopts a hawkish posture, as investors rotate into traditional safe havens such as dividend-paying stocks and short-term government bonds. The current environment is no exception, with capital flowing out of digital assets and into equities.
ETF Outflows Accelerate
The rotation is evident in exchange-traded fund flows. Spot Bitcoin ETFs recorded $2.2 billion in outflows this month, following $2.4 billion in outflows last month. This marks a sharp reversal from the inflows seen in March and April. Spot Ethereum ETFs have also shed substantial assets in 2025.
In contrast, equity ETFs have attracted significant capital. The Vanguard S&P 500 ETF (VOO) added over $125 billion in assets this year, pushing its total assets under management past the $1 trillion milestone.
Stock Market Rally Draws Capital Away
Major stock indices, including the Dow Jones, Nasdaq 100, S&P 500, South Korea's Kospi, and Japan's Nikkei, have all reached record highs, fueled by the artificial intelligence boom. In South Korea, the Kospi has surged more than 70% year-to-date, driven by gains in Samsung, SK Hynix, and SK Square. The first two companies crossed the $1 trillion market cap this year due to their AI-related businesses, prompting many local investors to shift from crypto to equities.
Japan has seen a similar trend, with companies like Kioxia and Softbank pushing indices to new highs. Both South Korea and Japan are among the most active crypto trading markets globally, making the rotation particularly impactful.
For more on Bitcoin's recent price action, see Bitcoin Drops Below $64K as Long Liquidations Accelerate, Rebound Falters. The broader impact of the Fed's stance on other assets is explored in Gold Breaks Below $4,000 as Hawkish Fed Shift Unwinds Debasement Trade and Dollar Poised for 2.5% Monthly Gain as Gulf Tensions and Hawkish Fed Boost Haven Appeal.
This article is for informational purposes only and does not constitute financial advice.
