In the week to May 17, the bitcoin exchange rate fell almost 6%, and investors withdrew almost $1 billion of capital from exchange-traded bitcoin funds (ETFs), breaking a six-week streak of inflows. This happened amid positive news about the regulation of the crypto market in the U.S.: the Senate Banking Committee approved the cryptocurrency bill CLARITY Act, amendments to which have been under discussion for about a year. Experts of market maker Wintermute explained it by a change in market sentiment due to rising inflation in the United States and the lack of spot demand for bitcoin, writes RBC.
The April report on consumer prices (CPI) was the trigger for a sharp reversal of sentiment. According to Wintermute, annual inflation was 3.8% with a consensus forecast of 3.7%, while the core rate rose 0.4% month-on-month.
“Inflation is back. Real wages have gone negative for the first time in three years and the energy shock is no longer a temporary phenomenon – it has become structural,” the marketmaker’s survey emphasized.
Markets reacted instantly. Ten-year US Treasury bond yields soared to 4.58% (+28 basis points over the week), reaching the highest since September 2025. Fed Funds rate futures have completely ruled out any rate cut in 2026 in five trading days, pledging a 44% probability of a hike by December. A week ago, that figure was just 22.5%.
Inflation is one of the most important macroeconomic indicators that is factored into rate decisions. A decrease or increase in the inflation rate in a country is considered by many investors as one of the reasons that may prompt the authorities to start the process of easing monetary policy, i.e. lowering credit rates, or tightening it, i.e. raising rates.
And since bitcoin has been correlated with the U.S. stock market most of the time in recent years, the main cryptocurrency is assessed by many investors as a risky asset sensitive to the tightening of monetary policy in the U.S.: this creates a tougher environment for investors and capital, which reduces investment appetite for risky assets.
Bitcoin’s temporary rally
Bitcoin’s (BTC) attempt to consolidate above $82k on the back of CLARITY Act news was unsuccessful. BTC ended the week at around $78 thousand, losing 5.7%. “Ether” collapsed by 10.2% to $2.1 thousand, and the ETH/BTC trading pair fell to 0.0275 at a one-year low.
“Last week we warned that the breakout was based on leverage and covering short positions [bets on bitcoin price declines, short positions] rather than spot demand. This week confirmed that,” the experts wrote, adding that Ethereum is “the wrong asset for this macroeconomic situation.”
The alarming signal came from institutional investors, Wintermute noted: spot bitcoin-ETFs recorded a net outflow of $1 billion, snapping a six-week streak of inflows, while ETH-ETFs lost $255 million. The market maker’s data also shows that institutional investors are “selling on the upside,” meaning that they see the rebound as a way to lock in their positions rather than a sustainable trend for continued growth.
Where is the bottom of the bitcoin rate
Wintermute analysts also maintain a cautious view even on potentially positive factors, such as the consensus moving forward on the CLARITY Act bill, “It remains to be seen how the bill will pass a full vote in the House of Representatives, and it is possible that its passage will be delayed for the medium term.”
The key level now is $76-78k per bitcoin, Wintermute believes, and holding this zone could bring back some confidence in the future outlook. However, the breakdown of $75 thousand with negative capital flows in bitcoin-ETF will open the way to $70 thousand, analysts believe.
“Betting on growth now means betting on institutional returns on the back of rising bond yields and accelerating inflation. And that is a difficult task until the market understands the changing macroeconomic environment,” Wintermute summarizes.
