Bitcoin's tumble below the $60,000 mark may have less to do with Michael Saylor's Strategy (MSTR) and more to do with inflation creeping higher, one analyst argued.

Market Context

The largest cryptocurrency by market cap has struggled in recent weeks as broader risk assets faced headwinds from unexpectedly hot U.S. inflation data. The April consumer price index report, released May 12, came in above expectations, reigniting concerns that the Federal Reserve may need to maintain restrictive monetary policy longer than anticipated. Bitcoin ETF flows have reflected this sentiment shift, with significant institutional outflows coinciding with the crypto market's weakness.

Analysis

In a Monday report, Markus Thielen, founder of 10x Research, wrote to clients that investors have largely misread the drivers behind crypto's sharp selloff over the past weeks. While much of the market focused on Strategy's first bitcoin sale since 2022 and the potential overhang if the largest corporate holder sells more, the bigger story has been a wave of institutional selling through spot bitcoin exchange-traded funds.

"The market has misdiagnosed this selloff," Thielen wrote. "Strategy is not the problem."

Since the U.S. inflation report for April came in higher than anticipated on May 12, U.S.-listed bitcoin ETFs have seen roughly $5.4 billion in net redemptions, Thielen noted. During the same period, Strategy accumulated about $2 billion worth of bitcoin, making it one of the few significant buyers in the market.

Thielen said attention should turn now to Wednesday's consumer price index report for May, which could determine whether bitcoin's recent correction deepens or stabilizes. While bitcoin appears technically oversold after its recent plunge, Thielen cautioned against treating a short-term bounce as the start of a sustained recovery. The firm expects bitcoin could see a relief rally early in the week, but the move will likely fade if inflation surprises to the upside.

Key Numbers

- $5.4 billion: Net redemptions from U.S.-listed bitcoin ETFs since May 12

- $2 billion: Bitcoin accumulated by Strategy during same period

- 4.3%: 10x Research forecast for annual inflation in May, up from 3.8% prior month

- 4.2%: Wall Street consensus estimate for May CPI

- $1.7 billion: Stablecoin net outflows last week

- $5.5 billion: Stablecoin net outflows over the past month

What to Watch

Wednesday's May consumer price index report looms as the next major catalyst for bitcoin and broader crypto markets. 10x Research's model forecasts inflation rising to 4.3%, which would reinforce concerns that the Federal Reserve will need to keep interest rates higher for longer or potentially consider additional hikes. Markets entered 2026 expecting multiple rate cuts but have now priced out easing altogether, with traders increasingly discussing the possibility of a Fed hike rather than a cut.

Traders should monitor ETF flow data closely as institutional demand remains the key driver of bitcoin prices, according to Thielen. "Institutional ETF flows are driving price," he wrote. "Follow the money, not the narrative." The broader crypto market's capital structure also warrants watching, with stablecoin outflows suggesting continued risk aversion among digital asset participants.