Bitcoin is trading at its lowest levels since February, as rising U.S. inflation, fading expectations for interest rate cuts, and record outflows from bitcoin ETFs combine to sap demand for the digital asset.
The price of bitcoin has fallen more than 11% over the past week, briefly dropping below $61,500 and losing a significant portion of the gains built up over the previous month. The move comes as traders reposition around a macro backdrop that has shifted decisively away from easy monetary policy.
Inflation shock flips rate outlook
U.S. inflation has re-emerged as a central driver of market behavior. In May 2026, the U.S. Consumer Price Index (CPI) climbed to 3.8%, forcing markets to abandon expectations of an imminent easing cycle and instead price in roughly 1.8 potential rate hikes.
That single data point reinforced a broader trend. Projections for 2025 rate cuts had already collapsed from about six cuts expected in September 2024 to nearly none by January 2025. They recovered briefly, only to weaken again when inflation moved back toward 3%. The 3.8% May CPI print renewed caution, strengthening expectations that the Federal Reserve will keep policy tight for longer.
Higher inflation and sticky policy rates are especially challenging for non-yielding assets such as bitcoin. With real rates elevated and liquidity constrained, the asset is increasingly behaving like a traditional risk asset, sensitive to shifts in macroeconomic expectations.
Etf outflows hit records as demand reverses
The policy pivot has fed directly into flows for spot bitcoin ETFs, which had been a key source of demand since their launch in 2023.
Following the latest inflation surprise, bitcoin ETFs recorded around $4.3–4.4 billion in cumulative outflows. Fourteen of fifteen consecutive sessions, including a 13-day stretch from May 15 to June 3, saw net withdrawals. That run marks the longest continuous outflow streak since these products were introduced.
Over that period, roughly 59,000 bitcoin were pulled from ETFs, representing the heaviest selling pressure seen over any 20-day window on record. The reversal marks a stark contrast to the steady inflows that accompanied ETF approvals and helped propel bitcoin’s last major rally.
Strategy’s buying slows, weakening a key demand pillar
In addition to ETF flows, the software company led by Michael Saylor—widely watched as a bellwether for corporate bitcoin participation—has scaled back its role as a persistent buyer.
Combined holdings by bitcoin ETFs and the company Strategy are now estimated at about $110 billion. But Strategy’s capacity to add significantly to its position has narrowed, limiting its impact as a secondary demand engine.
Market nerves were heightened by a regulatory filing showing Strategy sold 32 bitcoin between May 26 and May 31, its first sale in years. The amount was negligible in market terms, but symbolically important for traders who had long viewed the firm as a one-way accumulator of the asset.
With ETF inflows fading and Strategy’s incremental buying constrained, two of the main capital channels that powered the previous uptrend have weakened at the same time.
Rotation toward ai and tech leaves digital assets behind
The pressure on bitcoin is unfolding alongside a broader reallocation of capital within global markets.
Analysts report that money is flowing into artificial intelligence and technology shares, while enthusiasm for digital assets cools. Fiona Cincotta of StoneX notes that traders are becoming more selective in their risk exposure, favoring sectors seen as offering stronger growth visibility and clearer earnings drivers.
This shift has widened the performance gap between high-growth equities and cryptocurrencies, as digital assets struggle to attract fresh capital in an environment defined by higher rates and narrower liquidity.
Fed meeting and CPI release keep traders on edge
Attention now turns to the next U.S. inflation release and Federal Reserve decision, events that are likely to set the tone for bitcoin in the coming weeks.
The next CPI report is due on June 10 and will heavily shape expectations for the Fed’s upcoming policy meeting on June 16–17. Futures markets currently assign about a 98% probability that the central bank will leave interest rates unchanged at that meeting, leaving little room for hopes of near-term easing.
Prediction markets mirror the cautious mood. Some platforms signal a 62% probability that bitcoin will trade below $60,000 at some point during June, underlining concerns that the tightening policy backdrop and weak demand could trigger further downside.
Macro dominates as bitcoin trades like a risk asset
Analysts emphasize that bitcoin’s current weakness is driven less by internal network fundamentals and more by the global macro environment. The shift from liquidity-driven growth to an inflation- and rate-sensitive regime has diminished the tailwinds that once supported the asset.
With expectations for rate cuts pushed further out and real borrowing costs elevated, liquidity-sensitive assets face a tougher path. Historically, bitcoin has seen renewed institutional allocation when inflation peaks and markets begin to price a clear easing cycle.
Until evidence emerges that inflation is cooling decisively and rate-cut expectations return, bitcoin is likely to remain rangebound and volatile, closely tracking macro data, cross-asset capital flows, and shifting risk appetite across major financial markets.
For deeper macro context on Bitcoin under Fed policy shifts, explore what do interest rates have to do with Bitcoin.
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