Bitcoin’s Rally Fails Macro Test, Says Wintermute
Wintermute has stated that Bitcoin’s recent rally has failed its first major macroeconomic test, arguing that the price increase was driven more by leverage and short covering than by sustained spot demand. In its May 18 market update, the trading firm attributed the sharp reversal across digital assets to factors including persistent inflation, rising Treasury yields, ETF outflows, and renewed expectations of interest rate hikes.
“Last week we said we’d find out fast what kind of rally this was. We found out,” Wintermute wrote. “BTC failed at the 200-day on the first real macro shock, which tells you it was the squeeze driving it all along.” The firm’s analysis framed the week as a macro-driven repricing of assets.
April’s Consumer Price Index (CPI) came in at 3.8% year-over-year, exceeding the 3.7% consensus estimate, while core CPI rose 0.4% month-over-month. Wintermute noted that the inflation shock has become more difficult for markets to ignore, pointing out that the prolonged energy shock is now impacting core inflation and that real wages turned negative for the first time in three years.
Market Reacts to Inflation Data
Markets reacted swiftly to the economic data. The 10-year Treasury yield increased by 28 basis points during the week, reaching 4.58%, its highest level since September 2025. Furthermore, fed funds futures reversed expectations of rate cuts for 2026 and began pricing in a 44% chance of a rate hike by December, up from 22.5% a week earlier. Wintermute observed that the market narrative shifted from “when do they cut” to “do they hike” in just five trading days.
This repricing negatively impacted long-duration assets. Wintermute reported that 20-year-plus Treasuries fell 2.8%, while gold declined 3.8% despite the prevailing geopolitical backdrop. Brent crude rose 8.6%, leading the firm to conclude that “the only things that worked were the things causing the problem.”
Bitcoin’s Price Action and Liquidation
Bitcoin briefly surpassed $82,000 following the CLARITY Act vote but subsequently reversed sharply, closing Friday near $78,000, a 5.7% decrease for the week. The weekend slide towards $77,000 triggered $657 million in liquidations, including $584 million from long positions. Ethereum underperformed even more, falling 10.2% during the week.
Wintermute noted that ETH continued to weaken in both spot and derivatives markets, with ETH/BTC trading at 0.0275, funding rates softening, and relative implied volatility increasing. The firm described ETH as the “wrong asset for this macro.”
ETF Outflows and Institutional Selling
ETF flows also turned negative. Bitcoin spot ETFs recorded $1 billion in outflows for the week, ending six consecutive weeks of inflows, while ETH ETFs saw $255 million in outflows. Wintermute cited Glassnode data indicating that institutions were “selling into strength,” with the 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, the unwind is fast,” Wintermute wrote.
Technical Outlook and Key Levels
Bitcoin remains below its 200-day moving average near $82,200, having been rejected five times this month, according to Wintermute. The immediate support zone is between $76,000 and $78,000. A break below $75,000 could potentially lead to a decline towards the $70,000 to $72,000 range.
Wintermute acknowledged the broader structural case for Bitcoin, noting that exchange reserves remain near multi-year lows, long-term holders continue to accumulate, and the CLARITY Act is progressing. The firm also highlighted that tokenized Treasuries reached $15 billion on-chain, identifying this segment as an area of continued growth.
However, Wintermute emphasized that short-term flows are currently more significant than the structural narrative. “The flow data shows institutions used the rally to take profit rather than add, and in the short term that matters more than the structural story,” the firm wrote.
The next test, according to the update, is whether Bitcoin can hold the $76,000 to $78,000 area through Nvidia earnings on Wednesday, May 20. A hold would “rebuild some confidence,” Wintermute said, but a break below $75,000 with funding resetting and ETF flows negative could bring the low $70,000s back into view quickly. At press time, BTC traded at $77,297.
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