Wintermute Analysis: Bitcoin risks testing the $50,000 zone before a trend reversal
Despite Bitcoin (BTC) breaking its prolonged losing streak last week by bouncing from $60,000 back above $65,000, I am not rushing to declare the end of the bearish scenario. An analysis of capital flows and the macroeconomic backdrop suggests that the current rebound may be only a temporary respite before a deeper decline.
Two catalysts for the rebound: macroeconomics and geopolitics
The market received support from two factors that rarely align. First, May's US Consumer Price Index (CPI) data showed annual inflation at 4.2%—the highest since April 2023. However, the key point was that the figure matched expectations. Debt market participants had priced in higher numbers, and the alignment with forecasts eased some pressure. Core CPI meanwhile slowed to 2.9%, which, in my view, indicates the peak of the energy impulse has passed rather than accelerating further.
Second, and perhaps more significantly, the de-escalation of the conflict between the US and Iran. After more than 100 days of confrontation, the parties reached an agreement to reopen the Strait of Hormuz and lift the naval blockade. Formal signing is scheduled for June 19 in Switzerland. The market reaction was immediate: Brent crude plunged from $110 to levels above $80 over the past month, losing 6.6% in the last week alone.
The reduction in the geopolitical premium dragged down government bond yields and the US dollar. Cheaper oil improves inflation forecasts, so the CPI data and the end of the conflict amplified each other rather than canceling out. The next catalyst for the market will be the first Federal Reserve meeting under Kevin Warsh's leadership on June 17.
Why the bottom has not yet been reached
The main question now is not where the price will go, but when capital flows will reverse. Bitcoin remains a macro asset that grows solely on excess liquidity flowing through three channels: stablecoins, exchange-traded funds (ETFs), and publicly traded crypto-holding companies (DATs). None of them show signs of a turnaround yet.
Assets under management of DAT companies have shrunk from approximately $220 billion to $140 billion. Beyond Strategy, Bitmine, and Strive, new capital raising has virtually ceased. Exchange-traded funds are experiencing their longest streak of outflows since launch, and stablecoin inflows are following the same downward trajectory.
History repeats itself: the last cycle began with ETF approval in early 2024 and subsequent capital inflows. Now, institutions remain on the sidelines, while retail investors focus on trading leveraged stocks and funds. Until this trend changes, declaring a bottom, in my view, is premature.
My conclusion: The risk-reward ratio in the low $60,000 range looks attractive in the long term, and each sell-off leaves a more resilient holder base. However, I do not rule out Bitcoin dropping into the $50,000 zone before conditions improve. Investors should watch capital flows, not price or news headlines.