Bitcoin tumbled to as low as $78,725 on Thursday after U.S. inflation readings came in hotter than expected, dampening expectations for Federal Reserve rate cuts. The leading cryptocurrency has since recovered slightly to around $79,500, still down roughly 2% on the day and about 37% below its all-time high above $126,000 set last October.
The selloff follows a string of negative signals for digital assets, including a sharp acceleration in ETF outflows and cooling institutional demand from U.S. buyers.
Why the inflation print hit so hard
The hotter-than-anticipated inflation data effectively reinforced the Fed's wait-and-see stance, pushing any potential rate cut further out. For risk assets like bitcoin, that's a direct headwind: higher rates for longer tend to reduce appetite for speculative plays. Bitcoin's move below $80,000 accelerated shortly after the release, and the $78,000 level now looms as a critical support.
Leveraged long positions are heavily concentrated below that mark. If bitcoin breaks below $78,000, an estimated $1 billion of long positions on major exchanges could be liquidated, triggering further forced selling. Conversely, a bounce back to around $80,458 would put roughly $640 million in short positions at risk.
ETF outflows hit three-month high
U.S. spot bitcoin ETFs saw more than $800 million in outflows on Wednesday alone, with net outflows of $630.38 million — the largest single-day withdrawal in three months. The seven-day moving average of net flows has fallen to -$88 million per day, the deepest outflow streak since mid-February.
Despite that, month-to-date net inflows still sit above $400 million, suggesting that the recent outflow wave hasn't wiped out earlier accumulation. Still, the trend is clearly shifting. The Coinbase Bitcoin Premium Index, which tracks the price gap between Coinbase and offshore exchanges, has been declining since late April — a sign that U.S. institutional demand is cooling.
The $82,400 wall
On the upside, bitcoin faces immediate resistance at roughly $82,400, its 200-day moving average. The current price action echoes March 2022, when the cryptocurrency rallied about 43% before hitting that same moving average and then rolling over into a prolonged downtrend.
For now, traders are watching whether bitcoin can hold above $78,000 and whether any fresh catalyst — a shift in Fed language, a regulatory update, or a bounce in ETF flows — can break the momentum to the downside. Until then, the path of least resistance appears lower.
