The US-Iran confrontation was reignited on May 16: US insiders claim that the Pentagon is preparing to resume military actions against Iran, with options ranging from more intense airstrikes to special forces ground operations. In contrast, Iran emphasizes that shipping in the Strait of Hormuz will return to normal after the current instability, while effectively positioning this globally critical energy passageway under a shadow of uncertainty. Geopolitical risk premiums rise, and energy and inflation concerns return to the forefront; the already high-leverage and fragile crypto market has simultaneously pressed the "liquidation button": in the past 24 hours, approximately 139,000 people globally faced liquidation, totaling about $580 million, of which long positions accounted for approximately $552 million, exceeding 95%, with the largest single liquidation occurring in the BTCUSDT pair on Bitget, amounting to about $21.59 million, as long positions were abruptly reversed into a slaughterhouse under amplified geopolitical noise. Meanwhile, the 5x HYPE short position of address Loracle.hl turned profitable again after the price drop, accumulating a profit of about $41.43 million, with long and short gains tearing apart into opposite results overnight, highlighting that capital is pricing in conflict expectations and risk appetite contraction with real gains and losses, with mainstream assets like BTC and ETH being directly impacted by amplified downward pressure from geopolitical uncertainty and chain liquidations.

US-Iran confrontation intensifies: Middle Eastern risk premium rises

In mid-May, the old rift between the US and Iran was torn open again: according to US insiders, the Pentagon is devising plans to "resume military actions against Iran," with options lined up from more intense airstrikes to special forces ground operations. The backdrop is a stalemate in nuclear negotiations, and the US-Iran relationship is heating up again on a long-standing tense foundation. Almost simultaneously, Iran promises that "shipping will resume normally after the current instability in the Strait of Hormuz ends," while indirectly admitting that this global oil and shipping route is not "normal" at this moment. On traders' geopolitical risk radars, the Middle East has been marked red again, with the Strait of Hormuz becoming the core epicenter of risk premium.

From a macro pricing framework viewpoint, the first jump of tension in the Middle East often leads to an increase in the risk premium for oil prices and shipping costs, subsequently raising market concerns about energy supply and inflation, further boosting global safe-haven demand and compressing high-risk asset valuation multiples. This narrative has been swiftly recalled again in this US-Iran confrontation: in the model, "Instability in the Strait of Hormuz → Increased tail risks for crude oil and freight rates → Revision of inflation and risk premium factors upwards → High-beta assets under pressure," with crypto assets naturally falling into this category. However, it is important to note that we can currently only confirm that geopolitical risk expectations are heating up and see their overlap with chain liquidations over time, but we cannot simplistically label the Pentagon news as the sole "trigger" for this round of crypto crashes without adequate evidence. A more reasonable perspective is to view it as a key background variable that raises global risk premia.

Tension in the Strait of Hormuz and safe-haven sentiment

Once the timeline is pulled back to the Strait of Hormuz, the underlying emotional context of this round becomes much clearer. The Strait of Hormuz is one of the world's most critical oil and shipping passages; the US-Iran confrontation, combined with Iran's emphasis that "normal shipping will only resume after the current instability ends," itself acknowledges the short-term uncertainties. For asset pricing, this statement is automatically translated by the market into two lines: energy supply may be disrupted, inflation expectations and geopolitical risk premiums need to be revised upwards. The result is that the same balance sheet, under higher inflation and risk discount factors, sees the discounted value of future cash flows compressed, with high-beta assets being sacrificed first.

When safe-haven sentiment rises, the historically common path is for funds to withdraw first from high-volatility assets, returning to "well-explained" positions like cash and short-duration bonds, with crypto assets often being categorized as those needing priority liquidation. The recent Pentagon news and severe fluctuations in the crypto market are highly coincident in timing; on a board where long liquidations exceed 95%, traders naturally string together the instability in the Strait of Hormuz, energy and inflation concerns, and the sudden drop in BTC/ETH into a "causal chain," even though this causality has yet to be rigorously validated at the evidence level. Once this narrative is formed, it drives more positions to rebalance: some funds flow towards traditional safe-haven targets, while others simply exit and observe, linking chain liquidations and geopolitical concerns together into a self-reinforcing panic structure, which is precisely one of the key variables that temporarily suppress crypto risk appetite.

$580 million liquidation in 24 hours: long positions massacre

Under the amplified panic driven by this geopolitical narrative, the most leveraged and consistently directional positions were the first to be pushed to the liquidation line. In the past 24 hours, approximately 139,000 people globally faced passive liquidations, totaling about $580 million, of which long liquidations amounted to about $552 million, while short liquidations were only about $27.36 million, meaning long positions accounted for over 95%. The implication behind the numbers is straightforward: this was a typical "long liquidation," rather than a technical fluctuation driven by both sides, with the largest single liquidation occurring in the BTCUSDT pair on Bitget, amounting to about $21.59 million, completing a script from "all-in long" to "instant zero" at a single account level.

In the face of sharply rising macro uncertainty, high-leverage longs have almost no margin for error: as soon as the price is pressed down through critical levels in a short time, the risk engine will liquidate margins by selling at market prices, leading to passive selling of BTC and ETH contracts and corresponding hedged spot, further draining buy-side liquidity, creating a cycle of chain liquidations. In terms of market structure, the short-term consequences are clear: the perpetual contract funding rate rapidly falls or even turns negative, the price difference between futures and spot is compressed, and on-site leverage is forcibly reduced, forcing the surviving positions to tighten up and decrease leverage, with risk appetite spreading from mainstream coins to the entire market. Every $580 million-level liquidation is recorded in participants’ minds as a memory of "the macro changes, and long positions die first," thereby inhibiting BTC and ETH's upward momentum and leverage willingness before the next round of geopolitical shocks occurs.

Loracle.hl earns $41.43 million from short positions

On the same candlestick where 139,000 people and $580 million were ruthlessly liquidated, the on-chain address Loracle.hl stood on the completely opposite side: a previously floating loss of 5x HYPE short positions turned profitable again as prices plummeted amidst geopolitical panic, raising accumulated profits related to this transaction to about $41.43 million (statistics as of around May 16). When most of the market was still discussing "whether the Pentagon would really take actions against Iran," this address had already turned macro uncertainty into tangible numbers with its substantial leveraged short.

In comparison, in this round of approximately $580 million liquidation, long positions accounted for about $552 million, while short positions were only about $27.36 million, with long liquidations exceeding 95%, almost like a "liquidation referendum" targeting unilateral bullish leverage. One side sees highly concentrated retail long positions undergoing systematic sweeping, while the other side has a few large holders magnifying profits on high-beta products like HYPE through 5x leveraged shorts; this extreme differentiation is directly inscribed into the pricing memory of the derivatives market. Professional funds skillfully utilize futures, perpetual contracts, and leveraged positions to transform expectations of escalated US-Iran tensions and uncertainty over the Strait of Hormuz into directional shorts or hedging positions, forcing the risk premiums on contracts to lean towards the short side. When addresses like Loracle.hl are profiting significantly on marginal assets, the entire market will more quickly accept a harsh consensus: until geopolitical risks ease and the shadows of liquidations dissipate, the leverage structure of mainstream assets like BTC and ETH will continue to tilt conservatively, and risk appetite will be long-term reshaped by "short memories."

Putin's visit to China and the mid-to-long-term for crypto

As the chain of leveraged liquidations fixates attention on the 5-minute candlestick, another longer-cycle competitive line slowly emerges on the timeline—Russian President Putin has confirmed he will visit China for a state visit on May 19-20, 2026, at the invitation of the Chinese side, regarded as an important node for further deepening strategic cooperation between China and Russia post-2025. Alongside the US-Iran confrontation and uncertainties in the Strait of Hormuz, this visit to China brings the narrative of "energy—settlement—great power security" to the same table: on one side is the US potentially resuming military actions against Iran, pushing up energy and inflation risk premiums in the Middle East; on the other side, regular cooperative frameworks between China and Russia in energy and international affairs are imagined by the market to possibly converge further at the settlement system level.

From the perspective of macro variables, this convergence does not need to manifest in specific terms but is sufficient to reinforce expectations of "de-dollarization, alternative settlement, and multi-pricing of commodities," themes that have been bound to the long-term narratives of some funds and assets like Bitcoin over the past few years: if more energy trade can be repriced and settled within a non-dollar system, then the demand logic for "value-neutral, hard to sanction" alternative assets will be repeatedly iterated by capital markets. For BTC and ETH, this will not be a catalyst to immediately lift prices today—past $580 million liquidations and over 95% long positions have already indicated that short-term prices are still dominated by liquidity, leverage, and sentiment, with geopolitical variables more likely providing excuses for volatility direction. However, in the mid-to-long term, major interactions like Putin's visit to China will discount into pricing through two slow channels: first, the trust discount of a single currency system in global asset allocation, raising the long-term valuation ceiling for "geopolitically neutral assets"; second, in every round of sanctions and energy shocks, even if only a tiny proportion of institutional funds from emerging markets and resource-exporting countries is allocated to assets like BTC and ETH, as long as the direction remains consistent, it will quietly reconstruct their safety margins and narrative ceilings before the next high-leverage bull market arrives.

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