• Crypto market liquidations hit $240M as Fed rate cut approaches, with $176M from long positions.
• Bitcoin dominance could rise back to 60% as altcoins face 15-20% correction.
• XRP, SOL, DOGE lead the correction as Fed rate cut sparks “sell-the-news” event.
• Analysts predict Bitcoin to fall 5-8%, while altcoins face sharper declines in coming days.

As the crypto market gears up for the Federal Reserve’s rate cut this week, experts are predicting a potential 15-20% correction for popular altcoins like XRP, SOL, and DOGE. The anticipated rate cut has sparked a “sell-the-news” event, contributing to increased market volatility. Analysts are warning of a significant drop, especially for altcoins, as the overall market liquidations have surged to $240 million.

Crypto Market Faces Pressure Ahead of Fed Rate Cut

The crypto market is currently experiencing a wave of selling pressure. This follows last week’s positive rally, with Bitcoin’s price facing resistance near $116,000. However, experts like Ted Pillows have pointed out that the upcoming Federal Reserve rate cut could cause short-term weakness in both the U.S. equities and the cryptocurrency market. The Fed’s rate decision is set for September 17, and experts are expecting its impact to be felt strongly in the days following.

Pillows emphasized that September’s “triple witching” event could add more strain to the market. Triple witching occurs when stock options, index options, and futures contracts all expire at the same time, which historically leads to volatility. “Bitcoin could see a 5-8% drop, while altcoins like XRP, DOGE, and SOL may experience declines of 15-20%,” he stated. This warning suggests that the market could continue to face downward pressure in the short term as the Fed’s actions unfold.

Liquidations Surge Amid Market Correction

As the market anticipates the Fed’s rate cut, crypto liquidations have reached $240 million, with long positions accounting for $176 million of the total. This surge in liquidations reflects growing caution among investors who are reacting to the broader economic uncertainty and the upcoming rate changes. The correction has particularly impacted altcoins, with XRP, SOL, and DOGE leading the way in the downward trend. These tokens have seen notable price drops as investors take profits ahead of potential market instability.

Despite the recent surge in altcoin market strength, marked by the Altcoin Season Index reaching 84, many analysts believe that the upcoming rate cut may stifle further growth in the short term. Some expect Bitcoin’s dominance to rise again, especially as altcoins face steeper declines.

Bitcoin’s Relative Strength Amid Altcoin Drop

While altcoins like XRP, SOL, and DOGE struggle with declines, Bitcoin has managed to maintain relative strength. The price of Bitcoin remains firm at around $116,000, showing greater resilience compared to the altcoin market. According to analysts, Bitcoin’s dominance is expected to recover, potentially reaching 60% once again, as altcoins face more significant corrections.

As the Bitcoin dominance metric shows signs of rebounding, experts predict that Bitcoin could regain its momentum. While altcoins may be struggling in the near term, some analysts believe that Bitcoin will continue to outperform in the current cycle, at least until the end of Q4 2025.

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Long-Term Outlook for Altcoins and Bitcoin

While the short-term outlook for altcoins is bleak, experts are optimistic about the long-term prospects. Financial institutions, including Goldman Sachs, are predicting that the Fed will implement three additional rate cuts by the end of the year. These cuts could help improve market sentiment, especially for altcoins, as they may increase investors’ risk appetite.

However, experts caution that a full-blown altcoin season might not occur immediately. Analysts predict that altcoins could outperform Bitcoin in late 2025 and early 2026, when market conditions may be more favorable for altcoins. For now, the market is likely to face more corrections as the Fed rate cut approaches and economic uncertainties persist.

TLDR

• Yala’s Bitcoin-backed YU stablecoin crashed from $1 to $0.2046 after an attempted protocol attack on Sunday
• Attacker allegedly minted 120 million YU tokens on Polygon and sold 7.71 million for $7.7 million USDC
• Yala disabled Convert and Bridge features but claims all Bitcoin reserves remain safe in self-custody
• YU recovered briefly to $0.917 but continues trading below peg at around $0.79
• Major exchanges like Bybit and OKX temporarily suspended YU deposits and withdrawals due to network instability

Yala’s Bitcoin-backed stablecoin YU suffered a major price crash on Sunday after what the company described as an “attempted attack” on its protocol. The token fell as low as $0.2046, representing an 80% drop from its intended $1 peg.

The Yala team confirmed the incident in posts on X, stating the attack “briefly impacted YU’s peg.” The company has partnered with blockchain security firm SlowMist to investigate the breach and determine its full scope.

Update: All funds are safe. Bitcoin deposited to Yala remains self-custodial or in vaults, with none lost.

We’ve identified issues and, as a precaution, paused some product features. Please wait for our green light before re-engaging.

A full post-mortem and action plan will…

— Yala (@yalaorg) September 14, 2025

Attack Details and Response

According to blockchain analytics firm Lookonchain, the attacker exploited the Yala protocol by minting approximately 120 million YU tokens on the Polygon network. The attacker then bridged 7.71 million YU tokens and sold them for 7.7 million USDC across Ethereum and Solana networks.

The proceeds were converted into 1,501 Ethereum tokens and distributed across multiple wallets. The attacker still holds 22.29 million YU on Ethereum and Solana, with an additional 90 million YU remaining unbridged on Polygon.

Yala responded by disabling its Convert and Bridge features as a precautionary measure. The company stressed that all Bitcoin deposits remain “self-custodial or in vaults” with no losses to the underlying collateral backing the stablecoin.

Limited Recovery Efforts

YU briefly recovered to $0.917 following the initial crash but has since struggled to maintain stability. As of late Monday, the token was trading around $0.79 on DEX Screener, still well below its target $1 peg.

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Exchange Response and Liquidity Issues

Major exchanges including Bybit and OKX temporarily suspended YU deposits and withdrawals, citing “network instability.” These restrictions limited arbitrage opportunities that could have helped restore the token’s peg more quickly.

The incident highlights YU’s liquidity constraints, with only $340,000 in USDC available in its Ethereum pool according to DEX Screener data. Despite reporting a market cap of $119 million, this shallow liquidity likely contributed to the extreme price volatility during the attack.

Trading volume for YU spiked 500% during the exploit window, suggesting opportunistic traders contributed to the price swings. Blockchain researchers noted similarities to previous “infinite mint” exploits on cross-chain protocols, including the 2022 Nomad bridge hack that resulted in $190 million in losses.

The attack appears to have targeted vulnerabilities in Yala’s smart contract architecture rather than its Bitcoin reserves. YU launched in early 2024 as a decentralized alternative to traditional dollar-pegged stablecoins, with backing from investors including Dragonfly Capital and early liquidity support from Polygon Ventures.