Bitcoin plummeted below $80,000 on May 13 after the U.S. Producer Price Index climbed 6% annually—the highest level since 2022—triggering $400 million in crypto liquidations and a broad altcoin selloff. The move unwound leveraged long positions that had accumulated near the 200-day moving average of $82,000. BTC fell to $78,720 before stabilizing around $79,449.55 by May 14 morning. Ethereum open interest simultaneously hit a record 15.42 million tokens, signaling overleveraged positioning across both major cryptocurrencies.
Inflation Data Triggers Deleveraging Across Crypto
The Producer Price Index release marked the strongest annual reading since 2022, shifting market expectations around Federal Reserve policy and risk appetite. Traders had positioned aggressively for a breakout above the $82,000 level, assuming sustained upside momentum. The inflation print reversed that thesis, forcing liquidations of overleveraged longs. Of the $400 million total liquidations recorded, $117 million involved Bitcoin positions, with $102 million of those being long liquidations. Futures volume surged 14% to $189 million as traders exited positions.
Open Interest Collapse and Ethereum Record
Bitcoin open interest fell 2% to $133 billion, declining from 750,000 BTC to 745,000 BTC in a single day. Yet Ethereum’s open interest reached an all-time high of 15.42 million tokens—up from the previous peak of 15.33 million set in July of the previous year—despite ETH trading in a narrow range of $2,200 to $2,450 over the past four weeks. This divergence suggests traders positioned for volatility in ETH while liquidating BTC longs. The Altcoin Season indicator dropped to 43/100 from 50/100 on Monday, with 75 of the top 100 tokens trading in the red. The Memecoin Select Index fell 10% in 24 hours and 4% since midnight UTC.
Derivatives Market Signals Persistent Downside Risk
Options markets are pricing in continued weakness through late May. Put options on Bitcoin expiring May 29 at a $75,000 strike show elevated hedging demand, suggesting traders expect further downside risk before month-end. Negative cumulative volume delta across major tokens indicates sustained selling pressure rather than capitulation. The DeFi Select Index declined only 1%, outperforming broader altcoins, while Ethereum-focused tokens like ETHFI fell 7.5% in 24 hours. Outliers like XDC and Humanity Protocol rose 7.5% and 3.9% respectively, suggesting selective rotation into lower-correlation assets.
Next Test: Bitcoin Reclaims $82,000 or Further Deleveraging
Bitcoin must reclaim the 200-day moving average near $82,000 to stabilize leveraged positioning. Failure invites additional liquidation cascades targeting $75,000 puts. Fidelity’s FILQ fund launch on May 6 and ongoing spot Bitcoin and Ethereum ETF inflows provide institutional bid support, but macro headwinds from inflation data may override short-term technical support. The May 14 Clarity Act markup could introduce additional regulatory uncertainty. Watch for futures positioning shifts and put-call ratios to gauge whether liquidations have exhausted fresh long demand.
