Bitcoin under threat: Analysts warn of possible drop to $50,000
Despite the recent bounce of the first cryptocurrency from the $60,000 zone back to levels above $65,000, I believe it is too early for the market to relax. My in-depth analysis of capital flows and the macroeconomic backdrop indicates that the current rally may prove to be a false signal, rather than the start of a sustained recovery.
Two catalysts for the bounce: inflation and geopolitics
Last week, Bitcoin broke its prolonged series of declines thanks to two factors that worked in sync for the first time in a long while. First, the May US inflation data (CPI) matched market expectations, coming in at 4.2% year-over-year. Debt market participants had feared higher readings, and the alignment with the forecast relieved some of the tension. Core inflation meanwhile slowed to 2.9%, indicating that the peak of the energy impulse has passed.
Second, and in my view a more significant factor, was the resolution of the conflict between the US and Iran. The parties agreed to open the Strait of Hormuz and lift the naval blockade. The anticipated signing of the agreement on June 19 in Switzerland triggered a sharp drop in Brent oil prices—more than 6.6% over the week, from levels near $110 to levels above $80.
This reduction in the geopolitical risk premium pulled down government bond yields and the US dollar. Cheaper oil directly improves inflation forecasts, so the CPI data and the news of the truce did not cancel each other out but rather reinforced one another. However, the key question that now concerns me as an analyst is when the market will be able to turn around.
Bottom not yet reached: liquidity analysis
The main problem I see is the absence of a reversal in capital flows. Bitcoin grows on excess liquidity coming through three key channels: stablecoins, exchange-traded funds (ETFs), and public companies holding cryptocurrencies (DAT). At this point, none of them show signs of revival.
Assets under management of DAT companies have shrunk from approximately $220 billion to $140 billion. Beyond Strategy, Bitmine, and Strive, the attraction of new capital has virtually ceased. Exchange-traded funds are experiencing their longest series of outflows since launch. Inflows into stablecoins are also on a downward trajectory.
I recall how the last cycle began: real growth started with the approval of ETFs in early 2024 and the subsequent capital inflow. Now, institutions remain on the sidelines, while retail investors are caught up in trading stocks and leveraged funds. Until this reversal occurs, declaring that a bottom has been reached is, in my opinion, premature.
Despite the fact that the risk-reward ratio in the low $60,000 range looks attractive in the long term, and each sell-off leaves a more resilient base of holders, I do not rule out a scenario where Bitcoin drops into the $50,000 zone before the situation improves. My main advice to traders: watch capital flows, not price or news headlines.
My expert opinion: The market is in a consolidation phase with a bearish bias. Until we see a sustained resumption of inflows into ETFs and stablecoins, any bounce above $65,000 will be sold into. The $50,000-$52,000 zone is not just a psychological level, but an area where a real bottom for the next bull cycle could form.