Wintermute said Bitcoin’s latest rally failed its first major macro test, arguing that the move was driven more by leverage and short covering than by steady spot demand. In its May 18 market update, the trading firm pointed to hot inflation, rising Treasury yields, ETF outflows, and renewed expectations of rate hikes as the backdrop behind a sharp reversal across digital assets. “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 update framed the week as a macro-led repricing. April CPI came in at 3.8% year over year, above the 3.7% consensus estimate, while core CPI rose 0.4% month over month. Wintermute said the inflation shock has become harder for markets to ignore, noting that the prolonged energy shock is now moving into core inflation and that real wages turned negative for the first time in three years.
Rates responded quickly. The 10-year Treasury yield rose 28 basis points on the week to 4.58%, its highest level since September 2025, while fed funds futures erased all expected cuts for 2026 and began pricing a 44% chance of a rate hike by December, up from 22.5% a week earlier. Wintermute said the market narrative shifted from “when do they cut” to “do they hike” in just five trading days.
That repricing hit long-duration assets. Wintermute said 20-year-plus Treasuries fell 2.8%, while gold dropped 3.8% despite the geopolitical backdrop. Brent crude rose 8.6%, leading the firm to conclude that “the only things that worked were the things causing the problem.”
Why $75,000 Bitcoin Is The Line In The Sand
Bitcoin briefly moved above $82,000 after the CLARITY Act vote, but then reversed sharply and closed Friday near $78,000, down 5.7% for the week. A weekend slide toward $77,000 triggered $657 million in liquidations, including $584 million from long positions. Ethereum underperformed even more, falling 10.2% on the week. Wintermute said ETH continued to weaken across both spot and derivatives markets, with ETH/BTC pressing 0.0275, funding softer and relative implied volatility elevated. The firm described ETH as the “wrong asset for this macro.”
ETF flows also turned against the market. Bitcoin spot ETFs recorded $1 billion of outflows for the week, ending six consecutive weeks of inflows, while ETH ETFs saw $255 million leave the products. Wintermute cited Glassnode data showing 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.
The firm said Bitcoin remains below its 200-day moving average near $82,200 after being rejected five times this month. The immediate support zone is $76,000 to $78,000, according to the update, while a break of $75,000 could open the way toward $70,000 to $72,000.
Wintermute did not dismiss the broader structural case for Bitcoin. It noted that exchange reserves remain near multi-year lows, long-term holders are still accumulating, and the CLARITY Act continues to move forward after clearing the Senate banking committee. The firm also said tokenized Treasuries reached $15 billion onchain, describing the segment as an area of continued growth.
Still, Wintermute argued that short-term flows matter more than the structural story for now. “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.A break below $75,000, combined with funding resetting and negative ETF flows, could quickly bring the low $70,000s back into play. At the time of writing, BTC is trading at $77,297. Featured image created with DALL.E, chart from TradingView.com.
Frequently Asked Questions
Here is a list of FAQs based on the statement Wintermute says the Bitcoin rally was just a squeeze and a drop to the low 70000s could be coming
General Beginner Questions
1 What does squeeze mean in this context
A squeeze happens when traders who bet against Bitcoin are forced to buy it back quickly because the price goes up instead This buying pressure pushes the price up even further but the rally is often temporary and not based on strong longterm demand
2 Who is Wintermute
Wintermute is a major crypto trading firm and market maker They use algorithms to provide liquidity on exchanges Because they trade huge volumes their analysis of market trends is taken seriously by traders
3 So does Wintermute think Bitcoin is going to crash
Not a crash but a significant pullback They believe the recent price jump was artificial and driven by forced buying not genuine investor interest They predict a drop back down to the low 70000s which is still a high price but lower than recent peaks
4 Is this a guarantee that Bitcoin will drop
No This is a prediction based on market data and trading patterns Crypto markets are volatile and unpredictable A squeeze can turn into a sustained rally if new buyers step in but Wintermutes analysis suggests the opposite is more likely
Intermediate Market Context Questions
5 How can you tell if a rally is a squeeze versus real demand
Analysts look at metrics like Open Interest and Funding Rates During a squeeze Open Interest drops sharply while price spikes In a real rally both price and Open Interest tend to rise together Wintermute likely saw a spike in price with falling Open Interest
6 What specific price level is Wintermute predicting
They mentioned a drop to the low 70000s For example around 71000 73000 This suggests they believe the peak of the squeeze was unsustainable and the price will retrace to a lower support level