Bitcoin has entered a binary breakout scenario as it sits between two deep liquidation pockets, with stacked longs below $80,000 and dense short positions above $82,000. As per CoinGlass liquidation heatmap data, the cryptocurrency is trading near $79,200 after slipping 2.3% over the past 24 hours, consolidating around $80,800 with two unusually dense leverage clusters bracketing the current price. Bright yellow bands sit just above $82,000, where stacked short positions face liquidation, while a second cluster between $79,800 and $80,500 marks where leveraged longs would be wiped out. A decisive break could trigger a cascade and ignite the next major move toward $78,000 or $76,000.
The latest decline below $80,000 was compounded by geopolitical tensions as Chinese President Xi Jinping warned Donald Trump of potential conflict over Taiwan during the first U.S. presidential visit to China in nearly a decade. As per CoinGecko data, Bitcoin traded at $79,200 in Asian hours Thursday, down 2.3% over 24 hours and 2.2% on the seven-day, after slipping below the $80,000 level that had served as the floor for most of the past week. The sell pressure built around the Trump-Xi summit in Beijing, with Xi pressing Trump on Taiwan in their first meeting at the Great Hall of the People, warning of a potential 'collision or even clashes' if the issue is mishandled. China's readout of Xi's remarks appeared to be released before the meeting had concluded, thrusting the self-ruled island into the spotlight and rattling risk sentiment globally.
The crypto selloff was broad-based, with Solana (SOL) leading losses with a 5.6% drop to $90, giving back most of the weekly gains that had made it the standout altcoin for the past two weeks. Ether dropped 2.1% to $2,250 and is now down 3% on the seven-day, the second-weakest performer after Bitcoin. BNB shed 1.6% to $660 but held a 3.9% weekly gain, while XRP slipped 1.7% to $1.43. Only Dogecoin held in green territory at $0.1126, up 0.9% on the day, the only major cryptocurrency to post a 24-hour gain. The next test for Bitcoin sits at the $78,000 level, which marked the early-May low before the rally to $82,000.
The latest decline was compounded by back-to-back inflation surprises that complicate the Federal Reserve's path to easing rates later this year, removing one of the structural tailwinds crypto has been pricing in. Wednesday's producer price index print came in at 1.4% month-over-month against a 0.5% forecast and 6% year-over-year, following Tuesday's CPI reading of 3.8%, the hottest inflation print in almost three years. This follows April core PPI data that had already rattled sentiment, with headline PPI coming in at 6.0% year-over-year against a 4.9% forecast. The back-to-back inflation surprises have removed one of the structural tailwinds crypto has been pricing in, with rate cut odds evaporating as markets had been pricing in at least some probability of easing later this year before the PPI report.
Rate cut odds didn't just fade - they evaporated as markets had been pricing in at least some probability of easing later this year before the PPI report. After the print, odds of an outright rate hike climbed to roughly 39% - nearly four in ten traders now think the Fed's next move could be to raise rates, not cut them. The Federal Reserve left rates at 3.50%-3.75% on Apr. 29, with Bank of America and Goldman Sachs each pushing their first-cut forecasts further out this week. CME FedWatch data now implying roughly a 30% chance the Federal Reserve raises rates by year-end, up from 15% a week earlier. Bond markets moved on the news, with the 2-year Treasury yield climbing 3 basis points to 3.98%, the 10-year increasing 4 basis points to 4.45%, the dollar index gaining 0.3% to 98.29, and major US equity indexes fell at the open.
