Bitcoin experienced a sell-off after nearing $106,000, but data suggests this pullback may be temporary.
Key Takeaways
- Risk-averse behavior ahead of the May 13 CPI data release may have triggered Bitcoin’s price correction.
- Bitcoin’s market structure and bullish fundamentals indicate this dip could be short-lived.
On May 12, Bitcoin’s price briefly dropped, falling from a daily high of $105,819 to $102,388 during U.S. trading hours. At first glance, this abrupt correction seems surprising given the day’s positive news.
Profit-Taking and Risk Aversion Drive Current BTC Price Adjustment
Despite accelerating institutional adoption, Glassnode data suggests BTC may enter a brief consolidation phase after a 9% weekly gain.
The on-chain analytics firm warned:
"BTC supply mapping shows sustained strong demand. First-time buyer RSI remained at 100 all week. However, momentum buyers are still weak (RSI ~11), while profit-takers are increasing. If new inflows slow, lack of follow-up buying could lead to price consolidation."
Selling pressure intensified in perpetual futures markets, and spot markets saw increased sell orders as BTC approached the $106,000 resistance zone.
Market Reaction to Macroeconomic Factors
Traders attributed partial selling to:
- Pre-CPI risk management: Investors may be hedging before the May 13 inflation report.
- Priced-in optimism: The market likely fully digested the U.S.-China trade deal news, as BTC failed to stabilize above $104,000 post-announcement.
BTC/USD spot and futures CVD. Source: TRDR.io
The DXY (Dollar Index) rose ahead of the trade deal news, while equities surged. Bitcoin’s inability to hold the $104K–$105K range before stock market opening—and its subsequent decoupling from equities—suggests traders are closing long positions pre-CPI or awaiting lower entry points.
BTC/USDT futures 1-hour chart. Source: Velo
The chart above shows open interest rising hourly, with funding rates spiking during short squeezes and long liquidations.
Spot Demand Remains a Critical Catalyst
Last week’s rally was fueled by spot buying. With Strategy’s latest 13,390 BTC purchase (totaling 568,840 BTC) and consistent spot ETF inflows, the key question is whether bullish momentum will persist.
Weekly net inflows for spot Bitcoin ETFs. Source: SoSoValue
Given Bitcoin’s accelerating institutional adoption and improving regulatory clarity, this pullback appears technical and temporary. A strong rebound could follow once the CPI data is absorbed.
👉 Why Institutional Investors Are Bullish on Bitcoin’s Long-Term Growth
FAQ
Q: Why did Bitcoin drop before the CPI data release?
A: Traders often take profits or reduce exposure ahead of high-impact economic events to mitigate volatility risks.
Q: Is BTC’s current dip a buying opportunity?
A: Yes, if macroeconomic conditions stabilize post-CPI and institutional inflows resume.
Q: How does the U.S.-China trade deal affect Bitcoin?
A: While initially positive, the market may have already priced in the news, leading to a "buy the rumor, sell the fact" scenario.
👉 Expert Analysis: Bitcoin’s Next Price Target After Consolidation