Crypto Liquidations Surge on U.S. Airstrikes — $897M in Longs Wiped Out
By John Nada·May 28, 2026·4 min read
Crypto markets face turbulence as $897M in long positions are liquidated. U.S. airstrikes and rising oil prices stoke inflation fears.
The cryptocurrency market faced a significant upheaval as nearly $958 million in crypto positions were liquidated within 24 hours, with $897 million of this total attributed to long positions. This massive liquidation event occurred as investors reacted to U.S. airstrikes in the strategically critical Strait of Hormuz, an action that has sent ripples through financial markets worldwide. According to CoinDesk, this shift signals a broader move toward risk-off sentiment amid heightened geopolitical tensions.
Bitcoin and Ethereum, the two most prominent cryptocurrencies, did not escape the market turbulence. Bitcoin plummeted to its lowest point since April 13, trading near $73,400, marking a decline of approximately 1.2% since midnight. Similarly, Ethereum broke below the $2,000 mark for the first time since late March, sliding 1.5%. The immediate catalyst for this market upheaval was a notable spike in oil prices, which jumped to $96 per barrel before settling at $94, stoking fresh inflation fears.
The global markets have been closely monitoring the developments in the Strait of Hormuz, a vital corridor for global oil transportation. The U.S. airstrikes have dashed hopes for a ceasefire, intensifying geopolitical risks and contributing to a risk-off sentiment across various asset classes. The resulting spike in oil prices has heightened inflation concerns, a significant factor influencing investor behavior.
In the derivatives market, the impact of these developments is pronounced. Despite the price decline, Ethereum's open interest reached a record 16.39 million ETH, equivalent to $32.61 billion. This rise in open interest, even as Ethereum's price fell, points to traders adding shorts in anticipation of further losses rather than buying the dip. CoinDesk reported that Bitcoin's open interest remained relatively steady, but CME futures saw a sharp 9.85% decline in open interest to $7.56 billion. This suggests that regulated futures are pulling back while offshore perpetuals remain steady.
The derivatives landscape further complicates the market dynamics, with roughly $8 billion in options set to expire on Deribit this Friday. Bitcoin's max pain point is at $75,000, just above the current spot price, indicating traders' hedging strategies amidst volatile conditions. Despite headline volatility being near yearly lows, the elevated put-call skew shows that traders are still paying for downside protection. This is evident from the 25-delta put-call skew, which is elevated at +12.3% on the one-week and +10.3% on the one-month for Bitcoin, highlighting the demand for immediate downside protection.
Elsewhere in the altcoin market, the CoinDesk Computing Select Index plunged 2.9% after midnight UTC on Thursday. The Humanity protocol token experienced a dramatic fall of over 30% before bouncing back within minutes, illustrating the thin liquidity and its effects on price movements. The lack of liquidity across several altcoin pairs led to exaggerated moves, as seen with AI tokens like RENDER and FET, which were down by 5.5% and 8.5%, respectively. DeFi tokens JUP and ETHFI also faced losses of around 5%.
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CoinMarketCap's "Altcoin Season" indicator plummeted to its lowest level in more than 90 days, currently sitting at 30/100. This reflects the broader risk-off sentiment as investors shy away from riskier assets amidst the current market conditions.
Interestingly, the launch of 24/7 trading for Bitcoin futures and options on the CME might signal structural changes in the market. Historically, the CME's weekend gap has been a topic of interest for traders, but with the introduction of round-the-clock trading on Globex, this gap is now eliminated. While this structural shift marks another step toward fully integrated institutional crypto markets, liquidity remains concentrated in ETF options and offshore perpetuals, with IBIT options open interest far exceeding CME crypto options markets.
U.S. equity index futures are not immune to the broader risk-off sentiment either. S&P 500 and Nasdaq 100 derivatives are down 0.11% and 0.25%, respectively, reinforcing a risk-off sentiment that stretches beyond the crypto markets as macroeconomic concerns take center stage. The correlation between traditional financial markets and cryptocurrencies is becoming increasingly evident, as both are affected by macroeconomic trends and geopolitical developments.
The massive liquidation event also highlights the volatile nature of the cryptocurrency market, where large-scale liquidations can lead to rapid price movements and significant market shifts. The market's reaction to geopolitical developments underscores the interconnectedness of global financial systems, where events in one region can have far-reaching impacts on various asset classes worldwide.
As traders navigate the current market conditions, the emphasis on risk management and strategic positioning becomes paramount. The elevated demand for downside protection, as evidenced by the put-call skew, suggests that market participants are preparing for further volatility and potential downturns. This cautious approach is further reinforced by the record-high open interest in Ethereum, indicating a shift towards short positions.