Bitcoin’s $60K Plunge Driven by Inflation Fears and ETF Selling, Not MicroStrategy Sales

Bitcoin’s recent slide below $60,000 has sparked debate about what’s really behind the selloff. While many observers pointed fingers at MicroStrategy’s first bitcoin sale since 2022, a new analysis suggests the culprit is something far more fundamental: rising inflation and the institutional exodus through spot bitcoin ETFs.

Markus Thielen, founder of 10x Research, argued in a Monday report that the market has fundamentally misdiagnosed the recent downturn. The real driver, he contends, is a wave of institutional selling through spot bitcoin exchange-traded funds triggered by hotter-than-expected U.S. inflation data released on May 12.

Since the April U.S. CPI report came in above expectations, U.S.-listed bitcoin ETFs have experienced roughly $5.4 billion in net redemptions, according to Thielen’s analysis. During that same period, MicroStrategy accumulated approximately $2 billion worth of bitcoin, making it one of the few significant buyers in an otherwise bearish market. This pattern directly contradicts the narrative that MicroStrategy’s selling is the primary concern.

“The market has misdiagnosed this selloff,” Thielen wrote in his report. “MicroStrategy is not the problem.” This assessment aligns with broader discussions around MicroStrategy’s strategic positioning in the current market environment.

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The inflation narrative carries significant weight for bitcoin’s near-term trajectory. Thielen’s model forecasts annual inflation rising to 4.3% when May’s consumer price index data is released on Wednesday, exceeding both the previous month’s 3.8% reading and Wall Street’s consensus estimate of 4.2%. Any reading above 4% would reinforce concerns that the Federal Reserve will maintain higher interest rates for an extended period or potentially consider additional rate hikes.

This scenario presents a headwind for risk assets broadly. Markets entered 2026 expecting multiple rate cuts from the Fed, but a string of hotter-than-expected inflation and labor market readings has forced traders to reassess. The market is now pricing out rate cuts entirely, with some discussions emerging about the possibility that the Fed’s next move could be a hike rather than a cut.

Bitcoin’s technical positioning suggests some near-term relief could be possible. Thielen noted that bitcoin appears oversold after its recent plunge, which could support a short-term bounce early in the week. However, he cautioned against interpreting any rebound as the beginning of a sustained recovery. If Wednesday’s inflation data surprises to the upside, any relief rally would likely fade quickly.

The broader capital flow picture reinforces this cautious outlook. Stablecoins recorded roughly $1.7 billion in net outflows last week and $5.5 billion over the month, suggesting capital is leaving the crypto market entirely. Bitcoin futures open interest has also fallen sharply as traders reduced their exposure to the asset.

See also: MicroStrategy’s Saylor Mulls Bitcoin Sales to ‘Inoculate the Market’ Amid Price Volatility

Thielen emphasized that institutional ETF flows remain the critical metric for determining bitcoin’s next move. “Institutional ETF flows are driving price,” he wrote. “Follow the money, not the narrative.” This perspective contrasts with much of the market commentary that has focused on corporate bitcoin holdings and individual whale transactions.

The distinction matters because it shifts focus from company-specific actions to macroeconomic forces beyond any single entity’s control. While bitcoin’s identity crisis continues to explain unpredictable price behavior, the inflation-driven ETF selling narrative provides a clearer framework for understanding recent weakness.

For investors monitoring bitcoin’s recovery prospects, Wednesday’s CPI report will be the key event to watch. A reading above 4% would likely trigger additional selling pressure and potentially deepen the current correction. Conversely, a reading closer to or below consensus estimates could provide the relief needed to stabilize prices and potentially attract fresh institutional buying through ETF channels.

The coming days will test whether inflation concerns or technical oversold conditions prove more influential for bitcoin’s price action. Until the macro picture clarifies, expect continued volatility as institutional investors reassess their risk exposure in light of evolving Fed policy expectations.