The cryptocurrency market lost nearly $90.3 billion in value in one hour on May 16, pushing Bitcoin to $77,678 and causing mass liquidations across the board.
summary
- Producer inflation data came in 6% higher than expected, canceling out expectations of interest rate cuts and sending risk assets into a sharp sell-off.
- BlackRock’s IBIT lost $136 million as US Bitcoin ETFs recorded outflows of $290 million, ending a six-week inflow streak.
- Nearly 154,000 traders were liquidated within 24 hours, wiping out approximately $696 million from the financial derivatives market.
Crypto market It’s hard The market capitalization reached $90.3 billion in less than an hour on May 16, with the total value falling by 3.37% to about $2.59 trillion. Bitcoin (Bitcoin) fell to $77,678 while the price of Ethereum (Ethereum), Ripple (XRP), Solana (Sol), and Dogecoin (Doug) Each recorded losses ranging between 3.5% and 6%.
The sale was not specific to cryptocurrencies. This was driven by a macro repricing event that extended across global risk assets.
New US Producer Price Index data released this week came in about 6% above analysts’ expectations, the highest reading since December 2022, according to official data. The Consumer Price Index for April had already reached 3.8%. Together, the back-to-back inflation readings effectively ended near-term hopes for interest rate cuts by the Fed, with CME FedWatch an offer More than 44% chance of raising interest rates by December. Traders quickly sold risky assets.
Bitcoin recently tracked the iShares Russell 2000 ETF (IWM), which follows US small-cap stocks that are considered highly sensitive to price expectations. As small caps fell sharply due to inflation data, Bitcoin followed without delay.
Institutional selling exacerbated the overall hit
Bitcoin ETFs in the US registered $290 million in outflows on the day, ending a six-week streak of inflows. BlackRock’s IBIT led the withdrawals with roughly $136 million in recoveries. Total outflows from Bitcoin ETFs over the past week were about $1.15 billion, according to SoSoValue data.
Analyst Ali Martinez to publish On “This increase in selling pressure may soon impact price action,” Martinez warned.
The combination of macro-driven selling and institutional redemption removed two major layers of demand simultaneously, leaving the market exposed to leveraged long positions built up during the recent series of inflows.
The liquidation chain accelerated its decline
Once spot rates started to fall, the derivatives market amplified the move. according to Queen Glass According to the data, approximately 154,000 traders were liquidated over a 24-hour period, wiping out approximately $696 million from the derivatives market. Bitcoin liquidations alone rose 125% to over $235 million. Total open interest in cryptocurrency derivatives fell by more than 25% as traders quickly exited leveraged positions.
Cryptocurrency trader Ted Bellows to caution On “If Bitcoin loses the $78,000 level here, it could quickly drop to $74,000-75,000,” he said.
Analysts say the technical breakout, if sustained, opens the door to a deeper correction, with the $70,000-$68,000 area pointed to as the next important downside target.
Altcoins suffered greater losses than Bitcoin. XRP, Solana, BNB, Hyperliquid, Zcash, Dogecoin, Chainlink and Cardano all to publish Sharp declines as market sentiment shifted decisively to risk off, consistent with the broader pattern seen every time macro data turned optimistic this year.
