Wintermute: If Bitcoin falls below $75,000, it may quickly test the $70,000 range

May 19. Wintermute published a market note noting that the crypto sector faced heavy pressure this week, triggered by a resurgence in U.S. inflation and a sharp pivot in interest rate expectations. Bitcoin couldn’t clear its 200-day moving average in the face of this first major macro shock—a sign the prior uptrend was fueled more by short covering than lasting new capital inflows. The market regime has shifted dramatically: U.S. CPI picked up, core inflation came in hotter than forecasts, real wages dipped into negative territory, the 10-year U.S. Treasury yield climbed to 4.58%, and a more hawkish Fed chair is set to take the reins in three weeks. Market pricing of the Fed’s policy trajectory has also shifted quickly. Over just five trading days, sentiment flipped from pricing in rate cuts to fretting over a possible rate hike. Cross-asset performance echoed this shift: Brent crude surged 8.6% this week, while Bitcoin and Ethereum plunged 5.7% and 10.2%, respectively. Money has been flowing into inflation-sensitive assets, and during this downturn, cryptocurrencies have underperformed the broader stock market—a relative weakness that’s raising alarms. That said, long-term structural positives still persist: exchange Bitcoin reserves are holding at multi-year lows, hodlers keep accumulating, and the U.S. “CLARITY” crypto regulatory bill is moving forward. Right now, though, institutional funds seem more likely to take profits on bounces in the short run instead of adding to their holdings. The market is focused on Bitcoin holding the $76k–$78k range. If it can hold that level post-Nvidia’s earnings report on Wednesday, confidence could bounce back. But if it slides below $75k—paired with falling funding rates and ongoing ETF outflows—the price could quickly test the $70k level.