Bitcoin’s recent rally failed its first big test, Wintermute said, arguing that the move was driven more by leverage and short-covering than durable spot demand. In its May 18 market update, the trading firm cited hot inflation, rising Treasury yields, ETF outflows, and renewed interest rate hikes as the backdrop behind the sharp reversal across digital assets.
“We said last week that we would quickly find out what kind of cluster this was. We have found out,” Wintermute said books. “Bitcoin failed at 200 days on the first real macro shock, which tells you it was stress that drove it all along.”
The company’s update framed the week as a macroeconomic-led repricing. Consumer price index for April By 3.8% on an annual basishigher than the consensus estimate by 3.7%, while the core CPI rose by 0.4% on a monthly basis. Wintermute said the inflation shock has become difficult for markets to ignore, noting that the long-term energy shock is now shifting to core inflation and that real wages have turned negative for the first time in three years.
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Prices responded quickly. The 10-year Treasury yield rose 28 basis points during the week to 4.58%, its highest level since September 2025, while federal funds futures erased all cuts expected for 2026 and began pricing in a 44% chance of a rate hike by December, up from 22.5% the week before. The market narrative shifted from “when will they cut” to “will they raise rates” in just five trading days, Wintermute said.
This repricing has affected long-term assets. Over-20-year Treasuries fell 2.8%, while gold fell 3.8% despite the geopolitical backdrop, Wintermute said. Brent crude rose 8.6%, leading the company to conclude that “the only things that worked were the things that caused the problem.”
Why is $75,000 worth of Bitcoin the line in the sand?
Bitcoin briefly moved above $82,000 after Vote on the Clarity Actbut then reversed sharply and closed on Friday near $78,000, down 5.7% over the week. The weekend drop towards $77,000 led to $657 million being liquidated, including $584 million of long positions.
Ethereum underperformed much less, falling by 10.2% during the week. Ethereum continued to weaken in both spot and derivatives markets, with ETH/BTC pressing on at 0.0275, as funding declines and relative implied volatility increases, Wintermute said. The company called Ethereum “the wrong asset for this macro.”
ETF flows have also turned against the market. Spot Bitcoin ETFs hit $1 billion Outflows for a weekEnding six consecutive weeks of inflows, while ETH ETFs saw $255 million worth of products depart. Wintermute cited Glassnode data showing institutions are “aggressively selling,” with a seven-day moving average of net flows at negative $88 million per day, the weakest level since mid-February.
“When leverage is the marginal buyer, relaxation is quick,” Wintermute wrote.
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Bitcoin remains below its 200-day moving average near $82,200 after being rejected five times this month, the company said. The immediate support zone is $76,000 to $78,000, according to the update, while a break of $75,000 could open the way towards $70,000 to $72,000.
Wintermute did not ignore the broader structural argument for Bitcoin. Exchange reserves remain near multi-year lows, long-term holders are still accumulating, and the CLARITY Act continues to move forward after approval by the Senate Banking Committee, he noted. The company also said tokenized Treasuries have reached $15 billion on-chain, describing the sector as an area of continued growth.
However, Wintermute sees short-term flows as more important than the structural story at the moment. “Flow data shows that institutions used the rally to take profits rather than add, and in the short term this is more important than the structural story,” the company wrote.
The next test, according to the update, is whether Bitcoin can hold the $76,000 to $78,000 area through Nvidia’s earnings on Wednesday, May 20. Holding “will rebuild some confidence,” Wintermute said, but a break below $75,000 with funding resets and negative ETF flows could quickly resurface the $70,000 low.
At press time, Bitcoin was trading at $77,297.
Featured image created with DALL.E, a chart from TradingView.com
