Analysts at Wintermute warn: Bitcoin could test the $50,000 zone.
Despite the recent bounce of the first cryptocurrency from the $60,000 level, it is too early to say that the bottom has been reached. In my assessment, the current correction may be far from over, and the market has not yet exhausted its entire downward potential. Analysts at market maker Wintermute also suggest that Bitcoin (BTC) could drop to levels near $50,000.
What catalyzed the bounce?
Last week, BTC broke its prolonged four-week losing streak, bouncing from the $60,000 zone 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.
The first is the May US inflation data. The annual Consumer Price Index (CPI) stood at 4.2%, marking a high since April 2023. However, the figure matched market expectations, and core inflation slowed to 2.9%. It was precisely the absence of a negative surprise, which debt market participants had feared, that served as a positive signal. The energy impulse appears to have passed its peak and is not accelerating further.
The second and more important factor is the de-escalation of the geopolitical conflict between the US and Iran. The parties announced a deal, agreeing to open the Strait of Hormuz and lift the naval blockade. Against this backdrop, Brent crude oil collapsed from $110 to levels above $80 over the past month, losing 6.6% in the last week alone.
The reduction in the geopolitical risk premium pulled down the dollar and government bond yields. Cheaper oil directly improves the inflation outlook, so the CPI data and the cessation of the conflict this week reinforced each other rather than canceling out. I consider the first Federal Reserve meeting under Kevin Warsh on June 17 to be the nearest catalyst.
Why the bottom has not yet been reached
The main question now is when the market will turn around, and the answer lies in liquidity. Bitcoin remains a macro asset that grows on excess liquidity through three channels: stablecoins, exchange-traded funds (ETFs), and public companies holding cryptocurrencies (DAT). None of them have yet shown a reversal.
Assets under management of DAT companies have fallen from approximately $220 billion to $140 billion, and the attraction of new capital beyond Strategy, Bitmine, and Strive has virtually ceased. Exchange-traded funds are experiencing their longest streak of outflows since launch, while inflows into stablecoins are following the same downward trajectory.
As the history of the last cycle shows, real growth began with the approval of ETFs in early 2024 and the subsequent capital inflow. Currently, institutional participants remain on the sidelines, while retail investors are focused on trading stocks and leveraged funds. Until this reversal occurs, declaring that the bottom has been reached is premature.
My main advice: watch capital flows, not price or 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 that Bitcoin could move into the $50,000 zone before the situation improves. The market has not yet purged weak hands, and a new catalyst is needed for a full-fledged reversal.