Bitcoin Tests $75,000-$76,000 Support as Crypto Lags Behind Record US Stocks

Bitcoin and Ether underperformed even as US stocks climbed to record highs, underscoring a decoupling between equities and digital assets. The divergence comes despite some improvement in the macro backdrop, with capital still failing to flow back into crypto.

Crypto market maker Wintermute wrote on X on May 26 that "stocks keep moving higher, while crypto has entered a pause." Bitcoin and Ether fell 0.6% and 1.4%, respectively, last week even as US equities notched fresh all-time highs.

Wintermute said the macro backdrop changed last week. Brent crude dropped 9% as rhetoric related to Iran softened, while the yield on the US 10-year Treasury returned to 4.50%. That eased some inflation pressure tied to higher energy prices, and stocks rallied in response.

Consumer data, however, remained a headwind. The University of Michigan's consumer sentiment index fell to a record low of 44.8, while one-year inflation expectations stood at 4.8%. "The Iran shock lasted long enough to filter into household expectations," Wintermute wrote, describing it as a slower-burning issue that the Federal Reserve watches more closely than a single consumer price index reading.

Manufacturing data also kept price pressures in focus. The May manufacturing purchasing managers' index rose to its highest level in four years, and input costs climbed to their highest level since late 2022. Wintermute said goods inflation is accelerating again, and that minutes of the April Federal Open Market Committee meeting suggested additional tightening could be appropriate if inflation remains persistent.

The artificial intelligence-led rally was another key variable. Nvidia reported first-quarter revenue of $81.6 billion and projected second-quarter revenue of $91 billion. Data-center revenue rose 92% from a year earlier, and the company also announced an $80 billion share buyback and a dividend increase. Chief Executive Officer Jensen Huang described demand as "parabolic."

Wintermute also pointed to the muted after-hours reaction in Nvidia shares following the earnings release. "AI is pricing in perfection," it wrote. "Further strong results are no longer changing the market's direction." If AI momentum fades, record-low consumer sentiment, sticky inflation and a hawkish Fed could weigh more heavily on markets.

In crypto, the biggest overhang was slowing institutional demand. Wintermute said spot Bitcoin exchange-traded funds saw another roughly $1.26 billion in outflows, bringing total outflows over the past two weeks to more than $2 billion. That suggests the institutional buying that helped lift Bitcoin from the $70,000 range to near $80,000 in April has weakened.

"The fact that crypto failed to respond even as the macro backdrop improved is meaningful," Wintermute wrote. "If headwinds are fading and Bitcoin still cannot attract buyers, the problem is not macro. It is the marginal allocator."

Based on over-the-counter flows, Wintermute said the institutional buying pressure behind the recent rally is fading quickly. That may indicate institutional investors have reached allocation limits at current price levels or are reassessing the risk-reward profile.

Ether showed even greater weakness. The Bitcoin-to-Ether price ratio fell to its lowest level in 10 months and was down 35% from its peak in August last year.

Among altcoins, Hyperliquid's HYPE was a rare outperformer. Wintermute said HYPE logged $25.5 million in ETF inflows in a single session, while a wallet cluster routed through Anchorage accumulated 2.38 million HYPE, worth $135 million, over the past five weeks. It described the HYPE activity as "an early characteristic of a major token being formed."

Bitcoin is now testing support in the $75,000-$76,000 range. Wintermute called that zone the line in the sand. If it holds, Bitcoin could retest the low $80,000s. If it breaks, the market could quickly open the way to $70,000-$72,000.

Positioning, however, was not overheated. Funding rates were neutral and basis remained in the 2%-4% range, suggesting there is little fuel for a strong short-term directional move.

Structurally, Wintermute said supportive factors remain in place, including declining exchange balances, accumulation by long-term holders, progress on the Clarity Act and strength in HYPE. But "short-term price action is determined by flows, and right now those flows are negative," it wrote. "The bullish case needs institutional capital to return. For now, institutional investors appear to be taking a breather."