Bitcoin declines for four consecutive days: Reversal of rate cut expectations, a comprehensive analysis of the crypto leverage liquidation wave

May 19, 2026, Bitcoin has been hovering below $77,000 after four consecutive days of decline, with the intraday low touching $76,000, hitting a new low since May 1. As of the data collection time, BTC is quoted at approximately $76,980 on the Gate platform, down a total of 5.39% over the past week, with the previous week's rebound to a high of $82,800 completely erased.

The downtrend began around May 15. Bitcoin has been continuously retracing from above $82,000, and on May 18 during the Asian trading session, it accelerated downward in the early morning, once triggering nearly $500 million in liquidations within 15 minutes. Technically, the price has formed a clear downward channel, with the 4-hour chart showing lower highs and lower lows, and the moving averages aligned in a bearish configuration. The $76,000 level has become a short-term key psychological support.



## What Market Structure Is Revealed by Liquidation Data

Within 24 hours, the total liquidation across the entire network was approximately $650 million to $695 million, with over 90% of the liquidations being long positions. Data from Coinglass shows over 153k traders liquidated, with long liquidations totaling up to $670 million, while short positions were only liquidated in the tens of millions. Ethereum was the hardest hit, with daily long liquidations around $244 million to $329 million, followed closely by Bitcoin at about $260 million.

From the distribution of liquidations, it can be seen that before the decline, the derivatives market's long positions were already severely crowded. After the price quickly broke below $77,000, a large number of leveraged long positions were forcibly closed, creating a chain reaction of "decline → liquidation → further decline." This mechanism is highly consistent with the liquidation cascade logic seen in previous high-volatility episodes: when key price levels are breached, pre-set stop-loss and forced liquidation mechanisms accelerate the downward movement, and during periods of relatively thin liquidity, this effect is further amplified.

## How Has the Macroeconomic Outlook Reversed?

This decline was not caused solely by internal structural issues within the crypto market but is the result of deep re-pricing of the macro environment. In April, the YoY CPI reached 3.8%, the highest since May 2023; PPI increased by 6% YoY, hitting a new high since December 2022. Both inflation indicators significantly exceeded market expectations, completely breaking previous optimistic expectations for rate cuts.

CME FedWatch Tool shows that the probability of rate hikes in upcoming meetings in 2026 has risen to about 39%, while Polymarket prices in a 62% chance of no rate cuts for the entire year. The reversal from rate cut expectations to rate hike expectations has a notable impact on Bitcoin, which is a zero-yield risk asset: as the 10-year U.S. Treasury yield climbs to 4.44%—a 15-month high—the opportunity cost of holding Bitcoin increases sharply. Meanwhile, the Federal Reserve has completed a leadership change, with Kevin Warsh replacing Powell, further strengthening market expectations of a hawkish monetary policy.

## How Do Geopolitical Conflicts Transmit to the Crypto Market?

Geopolitical risk is a key catalyst for this round of decline. The ongoing deterioration of US-Iran relations, with Trump issuing tough statements toward Iran, and the US continuing to supply weapons and ammunition to Israel, keep tensions high. The Strait of Hormuz remains blocked, oil prices stay above $100, and gasoline prices surged by 15.6% in April alone. Rising oil prices further boost global inflation expectations, with bond markets reacting first: the 30-year U.S. Treasury yield broke above 5% and reached 5.1%, while the 10-year yield rose to 4.45%.

Under risk-averse sentiment, funds are withdrawing from risk assets. The spot Bitcoin ETF listed in the US saw about $1 billion net outflow during the week of May 11–15, ending a six-week streak of inflows. The divergence between capital flows into risk assets and safe-haven assets has intensified, putting pressure on Bitcoin, which has high beta characteristics.

## What On-Chain Data Reveals About Market Behavior

Exchange-held BTC reserves are at multi-year lows, but short-term selling pressure remains evident. On May 13, large whales sold off in the spot market, with addresses holding between 1,000 and 10,000 BTC net reducing their holdings by about 7,650 BTC, roughly $153k at an average price of $80,500. Meanwhile, miners continued to realize profits from new production, with leading mining companies increasing their output significantly in April, quickly selling the newly mined coins into the market.

However, on a longer-term view, on-chain data presents a complex mixed signal. While exchange reserves remain at historic lows, retail and small addresses have shown net accumulation during the decline—addresses with less than 1 BTC have accumulated over 23,000 BTC in the past 30 days, with three rounds of concentrated buying at $66,000, $70,000, and $80,000 levels. Large holders also continued to increase their holdings during the early May rally, with institutions like MicroStrategy still buying during the downturn. The dominance of long-term holders remains strong, but in the face of short-term selling pressure, this structural accumulation has not effectively prevented the price from falling.

## What Contradictory Signals Are Derivatives Markets Showing?

Futures market data shows clear divergence. Open interest has decreased slightly by about 2.9%, indicating cautious deleveraging amid uncertainty. However, funding rates for long positions have surged by 136.6%, suggesting that many traders are still betting on a rebound after the price decline. This contradictory signal carries risk: as leverage decreases, bullish sentiment rises, but if prices continue downward, residual long positions will face greater liquidation risk.

Perpetual contract volume delta (CVD) has plummeted by 278.7%, and spot CVD has fallen by 848.7%. From the directional volume data, sellers still dominate the market. The options market also leans bearish, with the 25-Delta Skew rising over 40%, indicating increased demand for downside hedging. Overall, the derivatives market's positioning has shifted from crowded longs during the rally to a cautious defensive stance, but some traders’ bottom-fishing impulses conflict with the overall market direction.

## What Are the Technical Support and Resistance Levels for the Next Step?

On the 4-hour chart, a clear downward channel has formed, with highs gradually decreasing and lows moving lower. After breaking through the $78,000 and $77,000 levels, the $76,000 region has become a short-term critical support. Previously, on May 1, Bitcoin found temporary support near $76,700 and rebounded above $82,000, highlighting the technical significance of that zone. If volume accelerates the breakdown below $76,000, the downside could extend to the $75,000–$75,500 range; resistance has shifted downward to around $77,500–$78,000.

Volume has increased alongside the price decline, indicating active selling pressure, contrasting with the ETF inflows during the early May rally. The daily MACD has formed a death cross and is diverging downward, while RSI hovers around 35, still above oversold levels. This suggests further downside potential in the technical picture, and a structural bullish reversal would require more time to repair.

## How Will Macro Pressures Evolve in the Medium to Long Term?

It’s important to distinguish between market-implied rate hike expectations and official Federal Reserve guidance. The current FOMC policy statement does not signal rate hikes, but bond market pricing has already formed an independent signal: traders’ probability of rate hikes by year-end has jumped from 14% a week ago to 48%. This pricing reflects a hedge against inflation persistence and geopolitical uncertainties.

Looking ahead, the crypto market’s trajectory remains highly dependent on macro narrative shifts. If upcoming inflation data (CPI, PPI) shows signs of moderation, market expectations for rate hikes may recede, providing relief for risk assets. Conversely, if oil prices continue to rise due to geopolitical conflicts, inflation pressures persist, and a prolonged high-interest-rate environment could impose structural constraints on crypto markets from an asset allocation perspective. Additionally, ETF capital flows, regulatory developments (such as the legislative progress of the CLARITY Act), and long-term on-chain holder positions will collectively influence the market bottoming process and recovery path.

## Summary

Bitcoin’s recent drop below $77,000 and the triggering of over $650 million in long liquidations result from multi-layered negative resonances: inflation data’s unexpected reversal of rate cut expectations, geopolitical tensions pushing oil prices higher and intensifying inflation, large ETF outflows, and crowded long leverage positions that triggered cascade liquidations during the market shift. Derivatives data shows that while overall leverage has decreased, conflicting signals between bullish and bearish sentiment suggest the market’s directional choice is still unresolved. In the short term, macroeconomic data releases and geopolitical developments will be key variables, and investors should assess the environment cautiously based on their risk tolerance.

## FAQ

Q: What are the main reasons for this round of Bitcoin decline?

A: The core drivers are macro in nature: first, April’s CPI (3.8%) and PPI (6%) both exceeded expectations, shifting market pricing from “rate cut expectations” to “possible rate hikes”; second, US-Iran tensions, with rising oil prices, increased risk aversion and pressure on risk assets. The combination triggered long leverage liquidations, causing a chain reaction of declines.

Q: How large are the liquidation figures over the past 24 hours?

A: Over the past 24 hours, total liquidations across the network amounted to about $650 million to $695 million, involving over 150k traders. Long liquidations accounted for over 90%, with Ethereum and Bitcoin being the main assets liquidated.

Q: What does ETF capital outflow imply for the market?

A: The spot Bitcoin ETF saw about $1 billion net outflow during May 11–15, ending a six-week streak of inflows. This reflects rising risk-averse behavior among traditional institutional investors amid macro uncertainties, but the structural accumulation by long-term holders has not stopped, creating a short-term short/long hedge.

Q: What are the main risks currently?

A: The key risks include: first, inflation data and geopolitical uncertainties, with rising oil prices potentially further suppressing risk assets; second, the contradictory signals in derivatives markets could trigger secondary liquidations; third, the support at $76,000 could be broken with high volume, potentially triggering new leverage liquidations.

Q: How should retail investors respond to the current environment?

A: In high-volatility conditions, leverage trading carries significant liquidation risk, so avoid high leverage participation in rebounds. Spot investors should monitor key support levels and technical signals, and stay updated on macro data and ETF flows. All decisions should be made based on individual risk tolerance and independent judgment.