Bitcoin retreated below the $80,000 threshold on Friday, erasing gains from a brief regulatory-driven rally as macroeconomic headwinds reasserted control over digital asset markets. The leading cryptocurrency was last trading at $79,202, down approximately 0.9% on the day, after oscillating between $78,686 and $81,974 during the session.
The decline comes as fresh U.S. inflation data dampened hopes for near-term Federal Reserve rate cuts. The producer price index rose 1.4% in April and 6.0% year-over-year, according to the Bureau of Labor Statistics, reinforcing the narrative that inflation remains stubbornly elevated. This has cast doubt on the thesis that softer price pressures would prompt the Fed to ease monetary policy, a scenario that typically benefits riskier assets like cryptocurrencies.
Rising Treasury yields are compounding the pressure. The 10-year U.S. Treasury note touched levels not seen in nearly a year, while the U.S. dollar posted its strongest weekly gain in two months. A stronger dollar tends to weigh on assets priced in greenbacks, and higher yields make yield-bearing instruments like bonds more attractive relative to non-yielding assets such as Bitcoin. Global equities also slipped as oil price concerns reignited inflation fears, according to Reuters.
Exchange-traded fund flows have failed to provide a counterbalance. Data from Farside Investors shows that U.S. spot Bitcoin ETFs experienced net outflows of $233.2 million on May 12 and a substantial $630.4 million on May 13. A modest inflow of $131.3 million on May 14 did little to offset the two-day drain, leaving sentiment fragile.
The sell-off was not confined to Bitcoin. Ether declined roughly 0.5%, while Solana and Cardano also retreated. Bitcoin's market share remained elevated near 60%, indicating that institutional capital is still favoring Bitcoin over altcoins, as noted by Giottus CEO Vikram Subburaj in comments to The Economic Times.
Market expectations for Fed policy are now heavily tilted toward a pause. Data from DeFi Rate, aggregating prediction market odds, shows traders pricing in a 97.9% probability that the Fed holds rates steady in June. Kalshi's figure stood at 96.5%, while Polymarket's was 98.0%. On Polymarket's June Fed contract, the "no change" outcome was assigned a 98% probability, with a 25-basis-point cut at just 1%.
Bitcoin's earlier weekly gains, fueled by the CLARITY Act headlines that briefly pushed the token near $82,000, have largely evaporated. Akshat Siddhant, lead quant analyst at Mudrex, noted that regulatory momentum could still attract new institutional money, particularly after the heavy ETF outflows. However, by Friday morning in New York, macro forces were once again steering the market.
Despite the bearish tilt, some analysts see the dip as potentially short-lived. Andri Fauzan Adziima, head of research at Bitrue Research Institute, pointed to support near recent lows and signs of accumulation by large holders. However, he cautioned that the Strategy-linked preferred-share buying approach has lost momentum in May, lacking the scale and urgency seen in March and April.
At this stage, the move appears less crypto-specific and more a broader reaction to interest rate shifts and liquidity conditions. If Bitcoin slips below the $78,500-$79,000 band, traders are eyeing potential downside supports. Conversely, if yields stabilize and ETF inflows resume, the failed breakout above $82,000 could simply return the market to its recent range rather than trigger a deeper slide.
