#MarketTurbulence Bitcoin’s sharp drop below $118,000 sent shockwaves through the crypto market on Thursday, as inflation data spooked investors and triggered over $1 billion in leveraged liquidations.

The steep decline came after Bitcoin’s recent rally to multi-month highs, raising questions over whether the bull run can sustain its momentum.

The sudden market turbulence reflects a broader risk-off sentiment, with both traditional and digital asset traders reacting to fresh U.S. inflation data. While Bitcoin had been trading steadily above key resistance earlier in the week, the sell-off underscores how sensitive the market remains to macroeconomic shifts.

Inflation Data Sparks Risk-Off Sentiment

The price fall overlapped with the release of hotter-than-expected U.S. inflation data, which reignited fears that the Federal Reserve will keep interest rates higher for a longer period. Higher inflation readings have a deflationary impact on risk asset demand, such as cryptocurrencies, as investors pre-empt tighter monetary conditions by rebalancing portfolios.

For Bitcoin, in turn, long one of the darlings of inflation-hedge speculation, the reaction was a reminder that short-term price action is still heavily linked to macro sentiment. While characters like Mike Alfred are optimistic on Bitcoin’s store-of-value argument with inflation pressures increasing, short-term speculators appear more worried about the prospect of closing liquidity and reduced speculative inflows.

$1 Billion in Liquidations Rattles the Market

Figures from cryptocurrency analytics firms showed that more than $1 billion of leveraged positions were unwound during the first 24 hours of the drop. The majority of these were long wagers on additional gains, which clearly show how sentiment can change so rapidly in this current environment.