Why the crypto market crashed today and dragged Bitcoin below $78k

The crypto market lost nearly $90.3 billion in value in a single hour on May 16, pushing Bitcoin to $77,678 and triggering mass liquidations across the board.

The crypto market shed $90.3 billion in market cap in under an hour on May 16, with total valuation dropping 3.37% to around $2.59 trillion. Bitcoin (BTC) fell to $77,678 while Ethereum (ETH), XRP (XRP), Solana (SOL), and Dogecoin (DOGE) each posted losses between 3.5% and 6%.

The sell-off was not crypto-specific. It was driven by a macro repricing event that spilled across global risk assets.

New U.S. PPI data released this week came in roughly 6% above analyst forecasts, the highest reading since December 2022, according to official data. April CPI had already printed at 3.8%. Together, the back-to-back inflation prints effectively ended near-term hopes for Federal Reserve rate cuts, with CME FedWatch showing more than 44% probability of a rate hike by December. Traders sold risky assets fast.

Bitcoin has recently tracked the iShares Russell 2000 ETF (IWM), which follows small-cap U.S. stocks that are highly sensitive to rate expectations. As small-caps fell sharply on the inflation data, Bitcoin followed without delay.

Institutional selling compounded the macro hit

U.S. spot Bitcoin ETFs recorded $290 million in outflows on the day, ending a six-week inflow streak. BlackRock’s IBIT led withdrawals with roughly $136 million in redemptions. Total Bitcoin ETF outflows over the past week reached approximately $1.15 billion, according to SoSoValue data.

Analyst Ali Martinez posted on X that Bitcoin miners sold close to 800 BTC worth roughly $64 million over the four days prior, adding further supply pressure at exactly the wrong moment. “This increase in selling pressure could soon impact price action,” Martinez warned.

The combination of macro-driven selling and institutional redemptions removed two major demand layers simultaneously, leaving the market exposed to leveraged long positions built during the recent inflow streak.

Liquidation cascade accelerated the decline

Once spot prices began falling, the derivatives market amplified the move. According to CoinGlass data, nearly 154,000 traders were liquidated over 24 hours, wiping out roughly $696 million from the derivatives market. Bitcoin liquidations alone surged 125% to over $235 million. Total crypto derivatives open interest fell more than 25% as traders rapidly exited leveraged positions.

Crypto trader Ted Pillows warned on X that Bitcoin has broken below a major multi-month ascending channel on the daily timeframe, with two consecutive red candles confirming the breakdown. “If BTC loses the $78,000 level here, it could drop quickly to $74,000–75,000,” he said.

Analysts say the technical break, if sustained, opens the door to a deeper correction, with the $70,000–$68,000 region cited as the next meaningful downside target.

Altcoins took heavier losses than Bitcoin. XRP, Solana, BNB, Hyperliquid, Zcash, Dogecoin, Chainlink, and Cardano all posted steep declines as market sentiment shifted decisively risk-off, consistent with the broader pattern seen each time macro data has turned hawkish this year.