Bitcoin faces challenges amidst changing US consumer sentiment and inflation, leading to a significant drop in the crypto market with over $50 million liquidated in just one hour.

The struggle to maintain bullish momentum for Bitcoin is attributed to the tightening economic conditions in the US. The recent inflation data played a crucial role in the sharp decline of BTC prices, plummeting from $63,446 to $60,763 within a short span.

The University of Michigan's consumer sentiment data revealed a decline from 77.2 in April to 67.4 in May, marking a six-month low and falling short of market expectations set at 76. Additionally, inflation expectations for the upcoming year surged to 3.5%, reaching a six-month high compared to 3.2% in April. The five-year inflation outlook also rose to 3.1% from 3.0%.

Furthermore, cautious remarks from Fed officials added to the uncertainty. Fed's Lorie Logan highlighted significant upward risks to inflation, emphasizing the need for policy flexibility and ruling out an immediate rate cut. Federal Reserve Governor Bowman stressed the importance of maintaining policy stability for an extended period.

Crypto Market Witnesses Over $50 Million Liquidation

Bitcoin's price experienced a more than 4% decline within hours, dropping to an intraday low of $60,690. The failure to sustain upward momentum post a recent breakout led to the tumble from the high of $63,446. Ethereum and other altcoins also saw a 2-4% decrease. This sudden fall raised concerns about the potential recovery of the crypto market later in the year.

Data from Coinglass indicates that over $150 million was liquidated across the crypto market in the past 24 hours, with $90 million in long positions and nearly $60 million in short positions being liquidated. A significant portion of these liquidations, totaling over $51 million, occurred within an hour.

Bloomberg's senior commodity strategist, Mike McGlone, highlighted the volatility and speculative nature of the crypto market, noting the contrasting trends between Bitcoin and gold. The recent inflation data led to a rise in the US dollar index (DXY) to 105.40 and a 0.055% increase in the US 10-year Treasury yield to 4.504%. As Bitcoin typically moves inversely to DXY and Treasury yields, the surge in both factors contributed to Bitcoin's decline to $60k, triggering a selloff in the crypto market.