Wintermute's bearish scenario: Bitcoin could test the $50,000 zone
Despite the recent rebound of the first cryptocurrency from the psychological level of $60,000, analysts at the major market maker Wintermute warn: the market bottom has not yet been reached. According to my data, the company's strategists believe that Bitcoin (BTC) is quite capable of retesting the area around $50,000, and the current rally is merely a temporary respite, not a trend reversal.
Last week, BTC broke a four-week losing streak, bouncing from the $60,000 support back to levels above $65,000. This momentum was supported by two key factors that, for the first time in a long while, worked in unison, creating a positive backdrop for buyers.
What catalyzed the rebound?
The first factor is the May US inflation data. The annual Consumer Price Index (CPI) stood at 4.2%, marking a high since April 2023. However, this figure matched market expectations. The key point, as I understand from analyzing the situation, was that debt market participants had feared a higher reading. The alignment with the forecast eased some of the tension. Additionally, core inflation slowed to 2.9%, signaling that the energy-driven price impulse has passed its peak and is not accelerating further.
The second, and more significant, catalyst is the de-escalation of the geopolitical conflict between the US and Iran. The parties announced a deal that includes the opening of the Strait of Hormuz and the lifting of the naval blockade. The official signing is scheduled for June 19 in Switzerland. Against this backdrop, Brent crude oil has collapsed from levels above $110 to just above $80 over the past month, losing 6.6% in the last week alone.
The reduction in the geopolitical risk premium has pulled down the dollar and government bond yields. Cheaper oil directly improves inflation forecasts. Thus, the CPI data and the cessation of the conflict this week did not cancel each other out but rather amplified one another, creating a powerful tailwind for risky assets, including Bitcoin.
Why the bottom has not yet been reached
The main question, in my opinion, is not whether Bitcoin will fall, but when the market will turn around. The answer lies in liquidity. Bitcoin remains a macro asset that grows on excess liquidity flowing through three channels: stablecoins, exchange-traded funds (ETFs), and public companies holding cryptocurrencies (DAT). And none of these channels have yet shown a reversal.
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 streak of outflows since their launch. The inflow of funds into stablecoins is also on a downward trajectory.
My professional analysis shows that the current situation resembles the beginning of the previous cycle: real growth started with the approval of ETFs in early 2024 and the subsequent capital inflow. Now, institutional participants remain on the sidelines, while retail investors are focused on trading leveraged stocks and funds. Until a reversal occurs in these flows, it is premature to declare that the bottom has been reached.
The key advice from Wintermute, which I fully endorse, is: watch the capital flows, not the price or news headlines. 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. Nevertheless, I do not rule out a scenario where Bitcoin drops into the $50,000 zone before the market situation fundamentally improves. That will be a moment of truth for many investors.