Bitcoin Slides Below $77K as Geopolitical Tensions and Inflation Fears Grip Markets

The Bitcoin price fell below the $77,000 mark over the weekend, giving back some of its recent gains. The main triggers are seen as renewed tensions between the US and Iran, rising oil prices, and growing concerns about persistently high inflation. Analysts point to several converging factors weighing on the market.

Altcoins are being hit harder than Bitcoin (as is often the case), with some posting significant losses. Ethereum, Solana, and Cardano, for example, are again trading roughly 10% below their prices from a week ago:

Price Decline and Current Market Situation

According to data from The Block, Bitcoin fell by around 1.2 percent on Sunday evening (New York local time) to $76,593. The intraday low was approximately $76,720. Just a few days earlier, the cryptocurrency had reached the $82,000 mark, driven by strong inflows into Bitcoin spot ETFs and optimism surrounding the so-called U.S. Clarity Act.

The Bitcoin Fear and Greed Index fell to a value of 27, approaching the “fear zone” once again. The previous week, the index had still been in the neutral range between 40 and 50.

Geopolitical Escalation as the Trigger

On Sunday, US President Donald Trump published a threat against Iran on his Truth Social platform. He warned that further delays in reaching a peace agreement could have military consequences. The statements immediately triggered reactions in commodity markets: Brent crude oil rose by 1.78 percent to $111.20 per barrel, while WTI crude gained 2.2 percent to $107.70.

Inflation Concerns and Rising Bond Yields

Alongside the geopolitical situation, macroeconomic factors are weighing on the crypto market. The yield on 30-year US Treasury bonds rose to 5.13 percent, the highest closing level since 2007. Yields on ten-year and two-year bonds also reached 12-month highs. Rising bond yields increase the opportunity cost of holding non-interest-bearing assets such as Bitcoin.

In addition, prediction markets such as Polymarket put the probability of an unchanged Fed policy at 98 percent for June and 94 percent for July. Interest rate cuts, which would support riskier assets like Bitcoin, are therefore moving into the distant future.

ETF Outflows End Six-Week Inflow Trend

The changed macro environment is also reflected in capital flows for Bitcoin ETFs. According to data from SoSoValue, Bitcoin ETFs recorded net outflows of one billion dollars in the week ending May 17. This brought a six-week streak of net inflows to an end.

Despite the price decline, on-chain data paint a mixed picture. Glassnode data, cited by Binance Research, show that nearly 60 percent of the Bitcoin supply has not moved in more than a year. Furthermore, Bitcoin holdings on exchanges are at a six-year low, which limits immediate selling pressure.

However, the so-called Short-Term Holder MVRV value (Market Value to Realized Value) is currently below 1. This means that more recent buyers are, on average, sitting on losses. This constellation makes the market more vulnerable to further macro-driven sell-offs.

Outlook: Between Macro Data and Regulatory Impulses

Analysts cite several factors that could influence the price trajectory in the coming week:

• US inflation data (PPI) on Thursday as a further indication of the breadth of price pressure
• Nvidia quarterly results on Wednesday as a sentiment indicator for risk assets overall
• Progress on the CLARITY Act, the legislative proposal on market structure for digital assets
• Communications from new Fed Chair Kevin Warsh on inflation, interest rates, and monetary policy