10x Research: Bitcoin's drop below $60,000 driven by ETF selling, not Strategy

Bitcoin's slide below $60,000 was driven by institutional selling through spot bitcoin ETFs following hotter-than-expected April U.S. inflation data, not by sales from Strategy, according to 10x Research founder Markus Thielen. Since the April U.S. CPI report on May 12, U.S.-listed bitcoin ETFs have seen roughly $5.4 billion in net redemptions, Thielen wrote in a Monday report, while Strategy accumulated about $2 billion worth of bitcoin over the same period, making it one of the few significant buyers in the market. "The market has misdiagnosed this selloff," Thielen said. "Strategy is not the problem." Bitcoin (BTC $63,370.32) has come under pressure as much of the market focused on Strategy's first bitcoin sale since 2022 and the potential overhang if the largest corporate holder were to sell more, but Thielen argued that the larger force has been a wave of institutional outflows from spot bitcoin ETFs.

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. 10x Research's model forecasts annual inflation rising to 4.3%, above both the previous month's 3.8% reading and Wall Street's consensus estimate of 4.2%. A reading above 4% could reinforce concerns that the Federal Reserve will need to keep interest rates higher for longer, or potentially consider additional hikes, the report said. Markets entered the year expecting multiple rate cuts, but following a string of hotter-than-expected inflation and labor market readings, traders are now pricing out easing altogether and increasingly discussing the possibility that the Fed's next move could be a hike rather than a cut.

While bitcoin appears technically oversold after its recent plunge, Thielen cautioned against treating a short-term bounce as the start of a sustained recovery, saying further weakness in risk assets is likely if inflation continues to surprise to the upside.