The cryptocurrency market kicked off May in decline, with Bitcoin dropping to its lowest level in two months, falling below $56,500. This downward trend continues from April, marking Bitcoin's most challenging month since the November 2022 crash triggered by the collapse of the FTX exchange.

As per data from CryptoSlate, Bitcoin's value dipped by roughly 8% in the past 24 hours, but it has slightly bounced back to $57,115 at the time of writing. This decline aligns with a broader market trend, with major cryptocurrencies like Solana, Ethereum, Cardano, and Avalanche all experiencing losses exceeding 7% during this period.

Among the top 20 cryptocurrencies by market capitalization, Polkadot's DOT token stood out with a modest gain of 0.41%.

Analysts attribute this market movement to the hawkish policy shifts in the United States and decreasing interest in spot Bitcoin ETFs despite their recent launch in Hong Kong.

Markus Thielen, head of research at 10x Research, points out a unique aspect of this market correction, stating, "This correction is very different, as institutional investors have a risk management approach that differs from most retail traders. Based on our estimates, the average entry price of the US Bitcoin ETF holders is approximately $57,300—potentially even 1-2% higher – a level that Bitcoin prices are approaching fast."

According to data from Coinglass, the market downturn resulted in the liquidation of over $450 million worth of positions held by 133,000 traders. Long traders, betting on price increases, suffered the most losses, with approximately $390 million lost, while short traders lost $65 million during this period.

Bitcoin traders incurred the most significant losses, totaling $163 million, with $142 million attributed to long traders and $20.95 million to short traders. Ethereum followed closely with liquidations amounting to approximately $115 million.

The largest single liquidation occurred on OKX, involving an ETH-USDT transaction valued at $6.07 million. Traders speculating on Solana and Dogecoin prices also faced double-digit liquidations totaling about $17 million and $15 million, respectively.

As of the time of writing, Bitcoin has attempted a recovery, trading at around $57,500. However, low liquidity and significant short leverage continue to suppress the price.