Crypto market cap fell 4% to $2.48T as Iran-U.S. clashes pushed oil above $91 and triggered $733M in Bitcoin ETF outflows, the largest since February. PCE data is next.
The crypto market lost 4% of its total capitalization over 24 hours as renewed military clashes between the United States and Iran triggered a $900 million liquidation cascade and the largest single-day Bitcoin ETF outflow since February. Bitcoin (BTC) fell from the $76,000 region to a five-week low below $73,000 before a partial recovery. Ethereum (ETH) dropped more than 5% under $2,000. Major altcoins including Solana (SOL), XRP (XRP), BNB (BNB), Dogecoin (DOGE), and Hyperliquid (HYPE) recorded losses between 6% and 14% as traders reduced exposure to risk assets.
Military tensions between Washington and Tehran intensified this week. WTI crude futures climbed 2.6% to trade above $91 per barrel on Thursday, while Brent crude rose toward $96 after reports emerged that U.S. forces struck Iranian military targets believed to threaten commercial shipping routes near the Strait of Hormuz. Iran’s Revolutionary Guard reportedly targeted a U.S. airbase, though officials did not disclose the location.
Negotiations between both countries remained deadlocked. Iran reportedly insisted on retaining control over the Strait of Hormuz and preserving its nuclear program as part of any potential agreement. The latest escalation weakened expectations for a short-term peace deal that could reopen the key shipping corridor and normalize global oil flows.
Rising energy prices added to fears that inflation could remain elevated for longer, potentially reducing the likelihood of near-term Federal Reserve interest-rate cuts and tightening liquidity conditions for speculative assets such as cryptocurrencies. This macro mechanism – higher oil feeding inflation expectations, which pushes rate-cut expectations further out – is the primary driver behind the broad risk-off move.
According to CoinGlass data, over $900 million worth of crypto positions were liquidated across the derivatives market over the past 24 hours, with bullish long positions accounting for most of the wipeout. The decline accelerated after Bitcoin lost support near $75,000 while Ethereum broke below the $2,100 area, triggering another cascade of forced liquidations across leveraged trading platforms. As exchanges automatically closed underwater bullish positions, the additional forced selling added more pressure to spot prices and intensified downside momentum.
Bitfinex analysts highlighted in a report shared with crypto.news that Bitcoin’s market structure weakened after a recent $766 million liquidation event, rather than undergoing a full leverage reset typically seen after large derivative flushes. Futures open interest dropped sharply after Bitcoin corrected more than 10% from highs above $82,000. Leveraged positioning returned unusually quickly afterward, largely driven by retail traders reopening bullish positions on crypto-native exchanges.
Institutional venues such as CME Group Inc. (CME) have not shown similar leverage activity. CME carries an Alpha Score of 54/100, labeled Mixed, in AlphaScala’s sector analysis. The Coinbase Premium Gap remained negative despite elevated funding rates. This divergence between retail and institutional positioning is the key structural risk: the market has not fully deleveraged, leaving it vulnerable to another cascade if the macro backdrop deteriorates further.
Institutional demand weakened considerably over the past two weeks. U.S. spot Bitcoin ETFs recorded roughly $733 million in net outflows on Wednesday, the largest single-day withdrawal since February this year. The latest exits extended the products’ losing streak to eight consecutive trading sessions.
Spot Ethereum ETFs extended their own outflow streak to 12 straight days after another $67 million exited the funds on Wednesday. Cumulative withdrawals from U.S. spot Bitcoin ETFs have now reached $2.33 billion over the past two weeks as institutional investors continued rotating capital away from crypto products during the recent volatility.
These outflows represent a sustained reduction in institutional exposure, not a one-off panic. The absence of a reversal signal suggests institutional allocators are waiting for a clearer macro catalyst before re-entering.
Options traders continued paying premiums for downside protection ahead of Thursday’s U.S. Personal Consumption Expenditures (PCE) report, the Federal Reserve’s preferred inflation gauge. Bitfinex analysts provided a clear framework for the next move:
“A hot print for PCE on Thursday, 28 May would increase stress on the leverage-long book by shifting the rate path outlook, whereas an in-line print would remove the macro catalyst, forcing the range to resolve purely on positioning dynamics.”
Thursday’s PCE report is the next concrete catalyst. The market is pricing a binary outcome: a hot print reinforces the inflation narrative and pressures the leverage-long book further; an in-line print removes the macro catalyst and forces the market to resolve based on positioning alone.
What would reduce the risk:
What would worsen the risk:
The crypto market is caught between a macro-driven selloff and a positioning structure that has not fully deleveraged. Thursday’s PCE report will determine whether the next move is a relief bounce or another leg lower. For traders, the asymmetry favors waiting for the data before adding risk.
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
Prepared with AlphaScala research tooling and grounded in primary market data: live prices, fundamentals, SEC filings, hedge-fund holdings, and insider activity. Each story is checked against AlphaScala publishing rules before release. Educational coverage, not personalized advice.