Crypto Slides on Hormuz Airstrikes as $897M in Longs Liquidate

What Happened

Cryptocurrency markets experienced significant losses on May 28, 2026, following U.S. airstrikes in the Strait of Hormuz. Bitcoin dropped to its lowest level since April 13, trading around $73,673.58, while Ethereum fell below the $2,000 threshold.

Liquidations totaled nearly $958 million across crypto derivatives markets in a 24-hour period, with long positions accounting for $897 million of those losses. The selloff reflected a broader shift to risk-off sentiment as investors reacted to geopolitical tensions that threatened to undermine ceasefire hopes and reignite inflation concerns.

Ether's open interest reached a record level even as the token declined, signaling that traders were actively adding short positions rather than buying the dip. This divergence typically indicates anticipation of further downside moves among sophisticated market participants.

Approximately $8 billion in options contracts were set to expire on Deribit on Friday, May 29, 2026, with bitcoin's maximum pain level calculated at $75,000, slightly above the spot price at the time of writing.

Why It Matters

The liquidation cascade highlights the fragility of leveraged positions in crypto markets during periods of elevated geopolitical risk. The concentration of long liquidations ($897 million) suggests that retail and institutional traders had positioned aggressively for continued upside, leaving them vulnerable to sharp reversals.

The elevated put-call skew in options markets indicates that traders continue to pay substantial premiums for downside protection, reflecting persistent uncertainty about whether the Hormuz tensions will escalate further. This protective positioning could amplify volatility if spot prices test key support levels.

The liquidations underscore how external macroeconomic shocks—particularly geopolitical events affecting energy markets—now meaningfully impact cryptocurrency valuations. The link between Hormuz tensions, inflation expectations, and crypto sell-offs demonstrates that digital assets no longer trade in isolation from traditional risk factors.

Expert Perspective

The swift liquidation of leveraged longs during geopolitical stress is consistent with historical patterns in risk-asset behavior. Similar episodes occurred during previous Middle East tensions, when investors quickly unwound speculative positions. However, the scale of liquidations in crypto—nearly $1 billion in a single day—reflects the sector's growing leverage and the speed at which digital markets respond to shocks.

The record open interest in Ethereum despite price weakness is noteworthy because it represents a structural shift in positioning. Rather than capitulation, this pattern suggests market participants are rotating from directional longs to hedged or short strategies, which could support price stability if volatility moderates.

What to Watch

Investors should monitor bitcoin's ability to defend the $73,500 support level and ethereum's $1,950 floor through the options expiration on May 29. The $75,000 max pain level for bitcoin suggests institutional options traders may have positioned for consolidation in that range. Additionally, watch for changes in put-call skew ratios—if premiums on protective puts compress sharply, it could signal reduced hedging demand and renewed risk-appetite. Any escalation in Hormuz tensions or new inflation data will be critical catalysts in the coming weeks.

Not financial advice.