The crypto market suffered a sharp sell-off on May 16, losing nearly $90.3 billion in total value within a single hour as rising inflation fears triggered panic across global risk markets.
Bitcoin dropped to $77,678, while major altcoins including Ethereum, XRP, Solana, and Dogecoin posted losses ranging between 3.5% and 6%.
The wider crypto market capitalization fell 3.37% to around $2.59 trillion during the sudden decline.
The sell-off was mainly driven by macroeconomic pressure rather than crypto-specific news.
Fresh US Producer Price Index data came in around 6% above analyst expectations, marking the highest inflation reading since late 2022. The report followed April Consumer Price Index data showing inflation at 3.8%, further weakening hopes for near-term interest rate cuts from the Federal Reserve.
According to CME FedWatch estimates, markets are now pricing in more than a 44% chance of another US rate hike by December.
As inflation concerns grew, investors quickly moved away from risky assets.
Bitcoin has recently shown close correlation with the IWM, which tracks small-cap US stocks that are highly sensitive to interest rate expectations. As small-cap equities declined sharply following the inflation data, Bitcoin followed the same downward direction.
Institutional selling added more pressure to the market.
US spot Bitcoin ETFs recorded roughly $290 million in daily outflows, ending a six-week inflow streak. BlackRock IBIT ETF led the withdrawals with about $136 million in redemptions.
Weekly outflows from Bitcoin ETFs reached approximately $1.15 billion, according to data from SoSoValue.
Crypto analyst Ali Martinez also reported that Bitcoin miners sold nearly 800 BTC worth around $64 million during the previous four days, adding more supply pressure to an already weak market.
Once prices started falling, the derivatives market accelerated the decline.
Data from CoinGlass showed nearly 154,000 traders were liquidated over 24 hours, wiping out roughly $696 million from leveraged crypto positions.
Bitcoin liquidations alone jumped 125% to more than $235 million, while overall crypto derivatives open interest fell more than 25% as traders rapidly closed positions.
Crypto trader Ted Pillows warned that Bitcoin has now broken below a major multi-month ascending channel on the daily chart.
He said losing the $78,000 level could quickly push Bitcoin toward the $74,000 to $75,000 range, while some analysts are now watching the $70,000 to $68,000 area as the next major support zone if weakness continues.
Altcoins experienced even steeper declines than Bitcoin as investors shifted heavily into risk-off mode following the inflation shock and broader market uncertainty.
