Bitcoin is currently positioned at a level typically seen only towards the end of bear markets, maintaining its stance even in the wake of the most intense U.S. inflation report in three years. Data indicate that BTC has declined towards its 200-week average, a significant four-year trend line closely monitored by long-term holders. The model indicates that bitcoin is currently positioned within the lowest 10% of its historical valuation range, a level that has been observed solely during the most severe phases of previous bear markets. The sentiment in the market appears to be equally depleted. The Crypto Fear and Greed Index, which gauges sentiment through volatility, social media activity, and market volumes, currently stands at 9, indicating a state of extreme fear. This marks a decline from 11 last week and a significant drop from 48 a month prior.
Those readings typically appear when price-sensitive sellers have largely completed their selling activities. Source continues to caution that bottoms are a process characterised by initial capitulation, followed by extended periods of sideways trading that gradually erode the resolve of remaining holders. Bitcoin briefly dipped below $60,000 this week for the first time since 2024, trading at $62,623 on Thursday, reflecting a 1.9% increase for the day. However, it remains lower for the week, as a record streak of ETF outflows continues to withdraw capital. The rebound was widespread yet superficial. Ether increased by 1.4% to $1,651, BNB saw a rise of 1.3% to $595, Solana experienced a gain of 0.9% to $65, and Dogecoin climbed by 1.1% to $0.085. XRP underperformed, declining 0.3% to $1.12. All of them have experienced declines over the past seven days, with ether leading at 6.5% and XRP following at 7.5%. Thursday’s gains mitigate the weekly decline rather than fully reversing it.
Inflation is hindering the prospects for a swift recovery. US consumer prices increased by 0.5% in May compared to April and 4.2% year-over-year, marking the quickest annual rate since early 2023, driven by rising energy costs due to the Iran war, as reported by the Bureau of Labour Statistics on Wednesday. The core measure, excluding food and energy, increased by 0.2%, falling short of economists’ expectations, marking the only weak point in an otherwise strong report. “Hopes for US regulatory clarity have diminished once more, as Polymarket odds for the Clarity Act’s passage in 2026 have decreased from 62% to 48% this week,” stated Yves Renno. Meanwhile, the pressure extends far beyond the realm of cryptocurrency. Global equities declined to their lowest point in over a month this week, as a selloff in the technology sector intensified and US forces targeted multiple sites in Iran, effectively ending the ceasefire that had been in place since April.
MSCI’s All Country World Index, the most comprehensive indicator of global equities, declined to its lowest level since May 5, while its Asia Pacific measure decreased by 0.8%, reaching a three-week low. Brent crude increased by 1.8%, reaching approximately $95 per barrel. The European Central Bank is anticipated to increase rates later Thursday for the first time since September 2023, as bond traders adjust to the prospect of elevated borrowing costs globally. ETF outflows have taken center stage in discussions, yet corporate bitcoin treasuries have also remained silent, further exacerbating the weakness on the demand side.