Crypto rout wipes $500 million as Bitcoin slips under $90,000; stocks rise while Fed split keeps FX on edge
A sharp crypto selloff collided with a risk-on equity bid, leaving traders to navigate a split-screen session: $500 million in liquidations across Bitcoin, Ether and XRP, a stock rally led by quality defensives, and commodities pulling in different directions as U.S. oil rigs rose and softs diverged.
Market snapshot
- Bitcoin fell below $90,000 amid broad crypto liquidations topping $500 million; traders watch for a weekly close in the red.
- Global stocks advanced, with investors favoring dividend stalwarts even as policy uncertainty lingers.
- Fed policy debate intensified; guidance from Chair Powell is pivotal as a leading Wall Street bank eyes a 25 bp cut but warns of limited market boost.
- U.S. oil rigs increased by 6 to 413, flagging shifting supply signals and potential crude volatility ahead of inventory data.
- Soft commodities mixed: cotton under pressure as managed money remains notably net short; coffee gained on Brazil dryness; wheat softened on supply headlines.
- Macro tailwind watch: U.S. tax refunds are expected to rise by $1,000+ in 2026, potentially supporting consumption and household deleveraging.
Crypto under pressure, risk appetite splits
A wave of forced deleveraging pounded digital assets, with Bitcoin sliding beneath $90,000 and major altcoins following lower. The move pushed realized liquidations above $500 million, underscoring fragile liquidity and elevated funding stress. The drawdown comes as traders brace for a potential weekly loss, tightening financial conditions within crypto even as traditional risk assets held a firmer tone.
FX and rates: Powell in focus as cut debate heats up
A visible split within the Federal Reserve over the timing and magnitude of rate cuts kept currency markets tentative. Morgan Stanley is penciling in a 25 bp cut, but the bank cautions the growth and risk sentiment boost could be limited. That setup typically leaves the dollar mixed: higher front-end rate volatility restrains high-beta FX, while expectations of eventual easing can curb deeper USD strength. Powell’s upcoming guidance will help set the near-term path for Treasury yields and FX carry dynamics.
Equities: quality still in favor
Stocks climbed despite crypto’s slump, with investors gravitating toward cash-generative, dividend-heavy names. Coca-Cola, Walmart and S&P Global were cited as quality leaders boasting five-year EPS growth above 10% and supportive analyst ratings—an expression of the ongoing preference for defensive growth and balance-sheet strength. In a market where policy visibility is blurred, that factor tilt has remained resilient.
Commodities: oil steadying, softs diverge
– Energy: U.S. oil rigs rose by 6 to 413, hinting at incremental supply capacity and adding a layer of uncertainty to near-term crude pricing. Traders are eyeing inventory data for confirmation on demand and refining margins. Rising rigs often cap rallies at the margin, but geopolitics and product cracks will remain key swing factors for volatility.
– Agriculture: Cotton futures slipped by 15–30 points as managed money maintained a net short of 74,000 contracts, a bearish positioning overlay that can amplify downside on weak demand headlines. Coffee climbed on continued dryness in Brazil, while wheat eased on ample supply signals and chatter tied to Russia-related peace discussions.
– Livestock: Lean hog futures advanced by about $1.05 on the week, even as managed money trimmed long exposure—an indication that price support may be driven more by underlying cash and seasonal dynamics than speculative flows.
Macro watch: tax refunds and the consumer
Looking further out, U.S. tax refunds are expected to rise by more than $1,000 per filer in 2026, a potential boost to consumer spending and household balance-sheet repair. For FX and rates, a sturdier consumption profile could temper recession hedges while keeping services inflation in focus—another reason markets will parse Fed communications with care.
Outlook
With crypto leverage under strain, equity dip buyers leaning into quality, and commodities sending mixed signals, cross-asset correlations remain fluid. Powell’s signaling on the policy path will shape dollar direction and duration appetite, while the climb in U.S. oil rigs and weather risks in Brazil keep commodity traders on alert. Near term, expect FX volatility to cluster around policy headlines and macro surprises, with risk assets sensitive to liquidity conditions across both traditional and digital markets, BPayNews notes.
FAQ
Why did crypto drop while stocks rallied?
Forced liquidations and thin liquidity in digital assets triggered a crypto-specific washout, while equities benefited from ongoing demand for quality defensives and expectations that policy easing, even if modest, remains ahead.
What does the Fed split mean for the U.S. dollar?
Policy uncertainty tends to keep the dollar mixed: expectations for future cuts can cap upside, but near-term rate volatility and cautious risk appetite support the greenback against high-beta and EM currencies.
How does a rising U.S. oil rig count affect crude prices?
More rigs signal potential supply growth, which can dampen rallies, especially if inventories rebuild. However, geopolitics, demand data, and refining margins often dominate price action in the short run.
Which commodities are moving on fundamentals?
Cotton is pressured by sizeable managed-money net shorts, coffee is supported by dryness in Brazil, and wheat is weighed by abundant supply narratives and diplomatic headlines. Hogs are firmer despite lighter speculative longs.
Will larger 2026 tax refunds change the macro outlook?
Higher refunds could support consumer spending and debt reduction, potentially bolstering growth. The inflation impulse is uncertain, but stronger consumption may influence the Fed’s calculus if demand proves sticky.
