The recent decline of bitcoin below the $60,000 threshold, with BTC trading at $63,767.49 prior to the drop, stems primarily from macroeconomic pressures rather than corporate selling dynamics. In a report issued on Monday, Markus Thielen, founder of 10x Research, argued that market participants have fundamentally misidentified the catalysts behind the sharp crypto selloff observed over recent weeks. While significant attention has fixated on Strategy (MSTR) executing its first bitcoin sale since 2022 and the potential supply overhang from the largest corporate holder, the dominant force driving price action has been a substantial wave of institutional selling through spot bitcoin exchange-traded funds. Data compiled by Woofun AI shows that since the U.S. inflation report for April exceeded expectations on May 12, U.S.-listed bitcoin ETFs have experienced approximately $5.4 billion in net redemptions.

Concurrently, Strategy accumulated roughly $2 billion worth of bitcoin during this same period, positioning the firm as one of the few significant net buyers in a predominantly bearish market environment. Thielen explicitly stated that the market has misdiagnosed this selloff and that Strategy is not the problem.

The immediate focus for investors must now shift to the consumer price index report scheduled for Wednesday, which will likely dictate whether the recent correction in bitcoin deepens or stabilizes. The 10x Research model forecasts annual inflation rising to 4.3%, a figure that surpasses both the previous month's 3.8% reading and Wall Street's consensus estimate of 4.2%. A reading exceeding 4% would reinforce concerns that the Federal Reserve will need to maintain higher interest rates for an extended duration or potentially consider additional rate hikes. Such a scenario represents unwelcome news for risk assets across the board. Markets entered the year anticipating multiple rate cuts, yet following a string of hotter-than-expected inflation and labor market readings, traders are now pricing out easing measures altogether. Woofun AI notes that sentiment has shifted so drastically that the possibility of the Fed's next move being a hike rather than a cut is increasingly discussed among market participants.

Although bitcoin appears technically oversold following its recent plunge, Thielen cautioned against interpreting a short-term bounce as the commencement of a sustained recovery. The firm expects bitcoin could see a relief rally early in the week, but this move will likely fade if inflation data surprises to the upside. The broader liquidity picture remains weak, with stablecoins recording roughly $1.7 billion of net outflows last week and $5.5 billion over the month, suggesting significant capital is leaving the crypto market.

Meanwhile, bitcoin futures open interest has fallen sharply as traders reduced their exposure to mitigate risk. Woofun AI analysis suggests that ETF flows remain the critical metric to watch to gauge bitcoin's next directional move. Thielen emphasized that institutional ETF flows are driving price, advising investors to follow the money rather than the prevailing narrative.