Foreign media, citing 10x Research, reported that Bitcoin's recent drop below $60,000 is more directly attributed to redemptions from spot ETFs following rising US inflation, rather than the previously focused-on Strategy selling factor. The upcoming US May CPI data may determine whether this correction continues or temporarily stabilizes.
ETF redemptions are considered the main reason.
In a report, Markus Thielen, founder of 10x Research, stated that the market may have misjudged the main reason for this decline in the past few weeks. While attention was initially focused on Strategy's first sale of Bitcoin since 2022 and whether it would continue to reduce its holdings, a bigger variable was the continued outflow of institutional funds through US spot Bitcoin ETFs.
The report noted that since the higher-than-expected US April CPI data on May 12, US-listed spot Bitcoin ETFs have seen a cumulative net outflow of approximately $5.4 billion. During the same period, Strategy& has instead bought approximately $2 billion worth of Bitcoin, making it one of the few major buyers in the market still significantly increasing its holdings.
The market is shifting its focus to the May CPI.
Thielen believes the next key data release will be the US May CPI, due this Wednesday. 10x Research's model projects the US annual inflation rate could rise to 4.3%, higher than the previous 3.8% and slightly above Wall Street's consensus forecast of 4.2%.
If inflation continues to climb above 4%, market concerns about the Federal Reserve maintaining high interest rates for an extended period could intensify, potentially even prompting a renewed debate about further rate hikes. Such expectations typically suppress the performance of risk assets, and Bitcoin would struggle to strengthen independently.
Cash flow remains a key indicator
10x Research believes that after its rapid decline, Bitcoin's short-term technical indicators are nearing oversold levels, and a corrective rebound at the beginning of the week is possible. However, if inflation data again exceeds expectations, this rebound may be unsustainable.
Besides ETF funds, on-chain and derivatives liquidity is also weakening. The report shows that stablecoins saw a net outflow of approximately $1.7 billion last week, with a cumulative net outflow of approximately $5.5 billion over the past month, reflecting that some funds are withdrawing from the crypto market. At the same time, Bitcoin futures open interest has also declined significantly, indicating that traders are generally reducing their risk exposure.
According to 10x Research, the most important factor to track in determining Bitcoin's next move is still ETF fund flows. Compared to a single narrative, whether institutional funds continue to flow in or out has a more direct impact on price.
