Crypto Crash: Geopolitical Tensions, Inflation, and Liquidations Trigger Market Plunge

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Why is the crypto market going down today (May 18)

The cryptocurrency market struggled on Monday due to increased global uncertainty, rising oil prices, persistent inflation in the U.S., and a large number of forced sales of leveraged positions. These factors combined to make investors more cautious about digital currencies.

Summary

  • The total crypto market capitalization fell 3.8% to $2.56 trillion as Bitcoin dropped below $77,000 amid rising macroeconomic and geopolitical pressure.
  • More than $661 million in crypto positions were liquidated over the past 24 hours, with nearly 95% of the wipeout coming from bullish long trades.
  • WTI crude climbed above $107 while U.S. spot Bitcoin ETFs recorded over $1 billion in weekly outflows as stalled U.S.-Iran talks and sticky inflation weakened risk appetite.

The total value of all cryptocurrencies decreased by about 3.8% in the last 24 hours, reaching approximately $2.56 trillion. Bitcoin, in particular, fell over 4%, dropping below $77,000 – a price level many investors watch – and hitting its lowest point in several weeks before regaining some ground.

Ethereum‘s price dropped almost 6%, falling close to $2,100. Other major cryptocurrencies, like Solana, XRP, BNB, Dogecoin, and Hyperliquid, also saw price decreases, ranging from 5% to 12%.

Over the last 24 hours, crypto traders lost positions worth over $670 million, according to data from CoinGlass. The vast majority of these losses – almost 95% – came from traders who bet prices would rise (known as ‘long’ positions).

Stock prices fell more quickly after investors saw new data showing that inflation in the U.S. is still rising faster than predicted.

Wholesale prices jumped 6% compared to a year ago, and consumer prices rose more than expected to 3.8%. These numbers are adding to concerns that inflation is still high and not coming down quickly in the U.S.

Recent reports showing higher inflation have led people to believe the Federal Reserve is less likely to cut interest rates soon. Many now expect rates to stay high for a while, or even increase if inflation keeps going up.

Meanwhile, yields on 10-year U.S. Treasury bonds rose from about 4.5% to 4.6%. This made safer investments like bonds more appealing compared to riskier ones, such as cryptocurrencies.

When interest rates rise and money becomes less available, it usually causes a decrease in funds available in financial markets. This often leads investors to reduce their holdings of riskier investments like Bitcoin and other cryptocurrencies.

Oil prices extend gains as Iran negotiations hit deadlock

Investors became more cautious as tensions between the United States and Iran continued to rise.

Oil prices rose on Monday, with West Texas Intermediate (WTI) crude surpassing $107 a barrel and Brent crude trading between $105 and $113. This increase follows gains of over 9% last week, fueled by concerns about potential supply problems. Stalled peace talks between the U.S. and Iran, along with disruptions near the Strait of Hormuz, are raising fears of a wider global oil shortage.

As a researcher following the situation, I observed that President Trump took to Truth Social on Sunday to issue a warning to Iran, stating that “the clock is ticking.” He urged Tehran to act quickly. Simultaneously, reports from Iranian media indicate that negotiations with the U.S. are stalled, with Iran claiming the U.S. isn’t offering any real compromises.

Increasing oil prices are fueling worries that inflation, driven by energy costs, could prevent central banks from lowering interest rates. This is also making investors less interested in risky investments like cryptocurrencies.

Bitcoin ETF outflows and liquidations accelerate selloff

When Bitcoin fell below key price levels around $80,000 and $78,000, it caused a wave of automatic sell-offs in the market, particularly for those trading with borrowed funds.

The rapid price drop caused exchanges to automatically close many risky, optimistic trades. This intensified the downward trend as more and more sell orders were activated throughout the market.

Institutional flows also weakened considerably over the past week.

U.S. Bitcoin ETFs experienced over $1 billion in total net outflows, bringing an end to several weeks of strong inflows that had been driving prices up. Ethereum ETFs also continued to see outflows, suggesting that institutional investors are currently less interested in buying crypto overall.

Bitcoin miners recently sold around 800 BTC, worth about $64 million, likely to lock in profits as the market weakened.

Investor confidence weakened further when MicroStrategy, led by Michael Saylor, revealed it might need to sell some of its Bitcoin holdings to cover its debts. This created more short-term worry about how much Bitcoin companies will buy in the near future.

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2026-05-18 10:56