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Bitcoin briefly fell below $80,000 today after traders reacted to hotter-than-expected U.S. inflation data, weaker risk sentiment, and renewed caution across crypto markets. BTC touched a 24-hour low near $79,802 before recovering back above the psychological $80,000 level. By late Tuesday, Bitcoin was trading around $80,700 to $80,900, with buyers stepping in near the breakdown zone but without restoring stronger upside momentum.
The move followed U.S. CPI inflation rising to 3.8% year over year in April, above the expected 3.7%. The data reduced expectations for Federal Reserve rate cuts in 2026 and pushed Treasury yields higher, pressuring risk assets including technology stocks and crypto.
Bitcoin’s decline also came after a rally that had taken the asset back above $80,000 and briefly toward $83,000. Some traders attributed the drop to profit-taking, while others pointed to weakening derivatives activity and lower spot demand.
Higher inflation can limit the Fed’s ability to lower interest rates, which often weighs on assets sensitive to tighter policy expectations. The article also noted uncertainty around Fed leadership: Kevin Warsh is expected to replace Jerome Powell as Fed chair if final Senate confirmation proceeds as scheduled, and markets are watching whether Warsh would lean toward tighter policy after the inflation reading or support calls for lower rates.
Geopolitical tension tied to the U.S.-Iran conflict has also contributed to caution by lifting energy prices. The article said higher oil and gasoline costs were a major driver of the CPI report, linking the conflict to both inflation and Bitcoin market sentiment.
On-chain data indicated that larger Bitcoin holders continued to accumulate while smaller retail wallets reduced exposure. Wallets holding between 10 and 10,000 BTC reportedly added 16,622 BTC, equal to a 0.12% increase. At the same time, wallets holding less than 0.01 BTC sold about 28 BTC, representing a 0.05% decline.
The split suggests larger stakeholders remained active buyers while smaller wallets showed more hesitation. The article added that accumulation by larger holders is often viewed as supportive during uncertain market periods, though it does not confirm a full recovery without stronger spot demand and improved market breadth.
Derivatives data suggested the market was not yet fully committed to another breakout. Open interest fell from about $29.09 billion on May 5 to $26.84 billion on May 11, a decline of roughly 7.75%, indicating leveraged positions were reduced.
Funding rates also turned negative and intensified, reflecting bearish positioning in derivatives markets. Negative funding can sometimes support rebounds if many traders are short and spot selling remains limited, but it can also signal weak confidence if buyers fail to regain control.
Wintermute said Bitcoin’s move above $80,000 resembled a short squeeze rather than a healthy breakout. The firm noted open interest rose from about $48 billion to $58 billion over the past month while spot volumes remained near two-year lows, a pattern that can indicate forced short covering rather than strong organic buying.
The article also described narrow price action despite forecasts that BTC could reach $126,000 by the end of the year. Around May 11, BTC traded close to $82,000 with limited movement. Spot volume rose only slightly and volatility declined, suggesting the market paused rather than entered a decisive expansion phase.
The near-term level highlighted was $82,300. A break above that zone, alongside improving spot demand and rising open interest, would make bullish continuation more likely; without it, the article said sideways trading may persist.
Bridgewater founder Ray Dalio questioned Bitcoin’s role as a safe-haven asset, saying it has not behaved like gold during periods of stress. He cited Bitcoin’s correlation with technology stocks, limited privacy, and tendency to be sold when investors need liquidity. The article said Dalio’s remarks add to the debate over Bitcoin’s market role during macro shocks, noting that while some investors treat BTC as “digital gold,” recent price action still appears closely tied to broader risk appetite.
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