The crypto market faced a major shakeup as over $1 billion in leveraged positions were wiped out, following a sharp decline in Bitcoin price. This downturn, triggered by a mix of macroeconomic concerns and market-specific events, comes just ahead of a significant crypto options expiry and key US economic data, which could further impact investor sentiment.

Bitcoin Plunges Below $101K Amid Broader Market Decline

Bitcoin (BTC) dropped nearly 5% to a low of $100,372, reflecting mounting pressure from external macroeconomic factors and market liquidations. The fall extends Bitcoin’s decline to more than 10% from its all-time high, dragging down the broader crypto market. A high-profile spat between Elon Musk and Donald Trump also weighed on market confidence, adding to the already volatile sentiment.

Altcoins were not spared in the sell-off, with Ethereum (ETH), Ripple (XRP), Solana (SOL), Dogecoin (DOGE), Cardano (ADA), and newer tokens like HYPE and SUI all posting sharp losses. While Bitcoin has since rebounded slightly to trade above $102,400, the short-term outlook remains clouded by uncertainty.

Over $1 Billion in Crypto Liquidations Rock Market

According to CoinGlass data, the past 24 hours saw crypto liquidations surpassing $1 billion, impacting over 227,000 traders. Long positions bore the brunt, accounting for more than $900 million of the total liquidated value, while short positions made up roughly $100 million.

Crypto Liquidation. Source: CoinGlass

The single largest liquidation order was a $10 million position on BitMEX’s XBTUSD pair. In total, Bitcoin and Ethereum saw net liquidations exceeding $600 million, prompting a sharp market correction.

CoinGlass highlighted that this marks the most significant long liquidation event since 25 February, with high-leverage traders being completely wiped out. Among them, trader James Wynn lost 155.38 BTC worth approximately $16.14 million and has reportedly exited all his long positions.

$3.8B in BTC and ETH Options Set to Expire

Market participants are now eyeing the expiry of Bitcoin and Ethereum options contracts on Deribit, the world’s largest crypto derivatives exchange. Scheduled for 8:00 UTC, the event involves 30,000 BTC options worth $3.21 billion and 242,584 ETH options valued at $588 million.

Ethereum Options Open Interest. Source: Deribit

The put-call ratio for Bitcoin options stands at 0.70, with a max pain point of $105,000 higher than the current BTC price suggesting that many traders may have either exited or been liquidated. Ethereum options reflect a similar sentiment, with a put-call ratio of 0.63 and a max pain point of $2,575.

Despite the downturn, crypto futures markets have shown early signs of stabilisation. Open interest for Bitcoin and Ethereum futures rose 0.80% and 1.74%, respectively, in the past four hours, indicating some buying activity amid the dip.

Focus Turns to US Jobs Report and Fed Policy Outlook

Beyond crypto-specific developments, the broader market is closely monitoring US economic indicators for cues on Federal Reserve policy. The 10-year US Treasury yield hovered at 4.39%, showing signs of stabilisation ahead of the May non-farm payrolls report. Meanwhile, the US Dollar Index (DXY) remains steady at 98.8.

With expectations of just 130,000 new jobs, the lowest gain in three months and unemployment forecasted to stay at 4.2%, the labour data could shape the Fed’s interest rate path. A softer jobs report, especially if paired with a rise in unemployment, may bolster the case for a rate cut as early as September.

CME’s FedWatch Tool currently assigns a 54% probability to a 25 basis point rate cut in September. Former President Donald Trump has continued to call for aggressive rate cuts, but Fed officials remain cautious amid global trade and policy uncertainties.

Cautious Optimism Amid Volatility

While some traders are buying the dip, volatility remains high, and caution is warranted. The combination of macroeconomic uncertainty, a key options expiry, and Fed policy speculation makes the coming days critical for the crypto market’s direction. Should the US jobs data trigger expectations of monetary easing, it may provide short-term relief and support a crypto rebound.