Wintermute says crypto rally unraveled as macro fears return

A recent crypto market rally driven by leverage and short covering may be losing momentum as inflation concerns, rising Treasury yields, and renewed macro uncertainty begin pressuring digital assets again, according to trading firm Wintermute.

In its latest weekly market update, Wintermute argued that the recent Bitcoin breakout lacked strong spot demand and was instead largely fueled by derivatives positioning and short squeezes.

“Last week we flagged the breakout was leverage and short covering, not spot,” the firm wrote. “This week confirmed it.”

Bitcoin fell 5.7% during the week after briefly moving above $82,000 following progress around the CLARITY Act, while Ethereum dropped more than 10%.

The selloff intensified over the weekend, with nearly $657 million in crypto liquidations, most of them long positions, according to the report.

Inflation and yields return to center stage

Wintermute linked the reversal largely to a sharp macroeconomic repricing triggered by hotter-than-expected U.S. inflation data.

According to the report, April CPI came in above expectations while the U.S. 10-year Treasury yield climbed to 4.58%, its highest level since September 2025.

The firm noted that futures markets have rapidly shifted from expecting Federal Reserve rate cuts toward pricing in the possibility of another rate hike later this year.

The report also pointed to:

• rising oil prices,
• negative real wage growth,
• and the confirmation of Kevin Warsh as Fed Chair
• as additional factors complicating the market outlook.

ETF outflows reinforce institutional caution

Wintermute’s analysis also highlighted renewed weakness in crypto investment products.

The report said spot Bitcoin ETFs recorded roughly $1 billion in outflows during the week, ending a six-week inflow streak, while Ethereum ETFs lost another $255 million.

Citing Glassnode data, the firm said institutions appeared to be “selling into strength” rather than adding exposure during the rally.

At the same time, Wintermute noted that some areas of the digital asset market continued showing resilience, including:

• XRP and Solana ETF-related products,
• long-term Bitcoin holder accumulation,
• and continued growth in tokenized Treasury products, which reportedly reached $15 billion onchain.

Crypto faces tougher macro backdrop again

Wintermute argued that crypto’s recent underperformance relative to equities may signal that digital assets are once again becoming increasingly sensitive to changing macro conditions.

The firm said Bitcoin now faces a key support zone around $76,000 to $78,000, warning that a break below $75,000 could open the door to a move toward the low-$70,000 range.

Still, the report suggested the longer-term structural case for crypto remains intact despite short-term pressure.

Final Summary

• Wintermute said Bitcoin’s recent rally was largely driven by leverage and short-covering rather than by strong spot demand.
• Rising inflation, higher Treasury yields, and ETF outflows are now pressuring crypto markets again, according to the firm.