"Whales Sell, Ants Liquidate"...Bitcoin, Ethereum, Solana, XRP 'Plunge' Simultaneously

▲ Cryptocurrency decline/ChatGPT generated image

The cryptocurrency market was shaken by nearly 1.5% in a single day, falling to $2.53 trillion. The simultaneous decline of Bitcoin and major altcoins was attributed to a combination of ETF outflows, large liquidations, sanction risks, and technical weakness.

According to crypto media outlet Coingape on May 27 (local time), the global cryptocurrency market capitalization fell by nearly 1.5% to $2.53 trillion. Bitcoin (BTC) dropped 3% on the day, falling to a low of $75,000, while major cryptocurrencies such as Ethereum (ETH), Solana (SOL), XRP, Zcash (ZEC), and NEAR Protocol (NEAR) also showed a synchronized decline.

The first shock to market stability came from a large sell-off of BlackRock Bitcoin ETFs. After institutional investors sold $1.3 billion worth of BlackRock's IBIT shares in a dark pool block trade, the overall market sell-off expanded. Bloomberg ETF analyst Eric Balchunas explained that the market absorbed the trade well, and the price saw no change on the day. However, Bitcoin spot ETFs experienced a net outflow of $333.6 million on Tuesday, with BlackRock IBIT accounting for a net outflow of $192.4 million. Ethereum spot ETFs also saw outflows of $35.1 million, with Fidelity's FETH experiencing a net outflow of $17 million and BlackRock's ETHA a net outflow of $1.9 million.

Macro variables are also weighing on investor sentiment. The US 10-year Treasury yield fell to around 4.47% on Wednesday, reaching a two-week low, but geopolitical tensions in the Middle East and caution ahead of the US Personal Consumption Expenditures (PCE) price release pressured the market. US President Donald Trump announced that discussions for an extended ceasefire and the reopening of the Strait of Hormuz were underway, but US Secretary of State Marco Rubio warned that a final agreement might take several more days. Coingape reported that economists predict PCE inflation to rise from the previous 3.5% to 3.8%.

The UK's sanctions on HTX also increased selling pressure in the cryptocurrency market. OKX and BIT stated that transactions with HTX addresses might be subject to enhanced compliance reviews, additional verification, restrictions, and other risk control measures. HTX stated, “We are aware of the recent situation regarding the UK sanction designation, and HTX Exchange is committed to fully complying with all applicable laws and cooperating with law enforcement agencies worldwide.” Over $350 million in liquidations occurred in major cryptocurrencies in the last 24 hours, with long position liquidations amounting to approximately $250 million and short position liquidations to $100 million. Around 95,000 traders were liquidated, and the single largest liquidation order was a $12.06 million WLFI-USDT trade on Binance.

Technical analysis also warned of further downside potential. Bitcoin fell 3% in the last 24 hours, trading around $75,345, with a 24-hour low and high of $75,204 and $77,990, respectively. Trading volume increased by 66% amid the sell-off. Popular analyst Ched Trading pointed out that a bearish engulfing outside bar pattern had formed on Bitcoin's daily chart, analyzing it as a reversal signal where bearish sentiment completely overwhelmed bullish sentiment. There was also a forecast that if Bitcoin falls below its 50-day moving average of $74,294, it could drop to $73,000.

Coingape assessed this decline as an extension of recent downward pressure rather than a full-blown collapse. However, the Fear & Greed Index plummeted from the "Fear" zone at 34 to the "Extreme Fear" zone at 25, and Ali Martinez stated that net capital inflows into the cryptocurrency market have entered a short cooling-off period, with monthly positioning shifting to approximately $2 billion. With a confluence of ETF outflows, HTX sanctions, large liquidations, and technical weakness, the market is reacting more sensitively to the potential for further selling pressure than to short-term rebounds.

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