Bitcoin A slide below $60,000 may have less to do with Michael Saylor’s (MSTR) strategy and more to do with rising inflation, one analyst argued.
In a report released Monday, Markus Thielen, founder of 10x Research, wrote to clients that investors had largely misinterpreted the factors behind the sharp decline in cryptocurrencies in recent weeks. While much of the market focused on Strategy’s first bitcoin sale since 2022 and the potential overhang if the larger company sold more, the bigger issue was a wave of institutional sales through spot bitcoin exchange-traded funds (ETFs), he said.
Since the U.S. inflation report for April came in higher than expected on May 12, U.S.-listed Bitcoin ETFs have seen net redemptions of about $5.4 billion, Thielen noted. Over the same period, Strategy has accumulated approximately $2 billion worth of bitcoin, making it one of the few significant buyers in the market.
“The market misdiagnosed this selloff,” Thielen wrote. “Strategy is not the problem.”
Thielen said attention should now turn to Wednesday’s Consumer Price Index report for May, which could determine whether Bitcoin’s recent correction deepens or stabilizes.
The 10x model forecasts annual inflation to rise to 4.3%, above the previous month’s figure of 3.8% and the Wall Street consensus estimate of 4.2%. A figure above 4% could reinforce concerns that the Federal Reserve will have to keep interest rates higher for longer, or even consider further hikes, the report said.
This would be bad news for risky assets. Markets began the year expecting multiple rate cuts, but after a series of higher-than-expected inflation and labor market indicators, traders are now pricing in a full easing and are increasingly discussing whether the Fed’s next move will be a hike rather than a cut.
Although bitcoin appears technically oversold after its recent slide, Thielen cautioned against viewing a near-term rebound as the start of a sustainable recovery. The company expects Bitcoin to see a relief rally early in the week, but this move will likely fade if inflation surprises to the upside.
The broader flow picture also remained weak, 10x Research said. Stablecoins saw around $1.7 billion in net outflows last week and $5.5 billion over the month, suggesting capital is leaving the crypto market. Meanwhile, Bitcoin futures’ open interest fell sharply as traders reduced their exposure.
Thielen said ETF flows remain the key metric to watch to gauge Bitcoin’s next move. “Institutional ETF flows drive prices,” he wrote. “Follow the money, not the narrative.”
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