The crypto market faced a significant decline on May 18, driven by a combination of geopolitical tensions, rising oil prices, persistent U.S. inflation, and massive leveraged liquidations. The total market capitalization dropped by 3.8% to $2.56 trillion, with Bitcoin falling below $77,000 before a slight recovery.
Over $670 million in crypto positions were liquidated in 24 hours, with long positions accounting for nearly 95% of the losses. Ethereum slid nearly 6% to around $2,100, while altcoins like Solana, XRP, and Dogecoin saw losses between 5% and 12%.
The sell-off intensified after hotter-than-expected U.S. inflation data, with the Producer Price Index rising 6% year-over-year and Consumer Price Index at 3.8%. This reduced expectations for Federal Reserve rate cuts, pushing 10-year Treasury yields up to 4.6%, making safer assets more attractive.
Geopolitical risks escalated as WTI crude surged above $107 per barrel due to stalled U.S.-Iran talks and threats to the Strait of Hormuz. President Donald Trump warned Iran on Truth Social, adding to uncertainty and fears of energy-driven inflation, which could delay monetary easing and weaken demand for risky assets like cryptocurrencies.
Bitcoin’s drop below $80,000 and $78,000 triggered automated liquidations, accelerating downside momentum. U.S. spot Bitcoin ETFs saw over $1 billion in net outflows, ending a strong inflow streak, while Ethereum ETFs also faced outflows. On-chain data revealed Bitcoin miners sold approximately 800 BTC worth $64 million, and Strategy disclosed potential risks of selling Bitcoin to manage convertible notes, further pressuring sentiment.