Is the US market headed for a sudden crash?
From a technical point of view, the idea does not seem far-fetched. Risky assets have entered a phase of increased volatility with Bitcoin [BTC] fell below $80,000 as nearly $60 billion left the market on May 15 alone.
Still, this move seems less “crypto-specific” and more tied to the growing macro FUD.
As shown in the chart below, inflation in April was 3.8%, up 0.5% from March and reaching levels last seen in May 2023. Naturally, this has brought Bitcoin’s hedging story back into the spotlight.
That said, while the outflows remain notable, they do not yet point to conditions consistent with a large-scale market crash.
That said, the market is already starting to price in the risk.
Data from the CME Group FedWatch Tool shows that US interest rate futures assign a greater than 50% probability of a Fed rate hike in January. Simply put, traders position themselves for tighter liquidity, and risky assets tend to feel that pressure first.
In this context, Bitcoin’s decline of more than 2.6% in less than 48 hours raises an important question: is this just a short-term shakeout or the early stages of a deeper correction?
To get a clearer picture, it helps to look at how investors position themselves after the inflation peak.
Bitcoin faces a demand test amid rising liquidity fears
From a strategic perspective, long-term holders’ positioning acts as an early sign of Bitcoin’s broader trend.
The idea is simple: while short-term holders tend to chase quick price movements, long-term holders offer a clearer view of where the market is actually going.
As Bitcoin adoption increases, institutional investors naturally fall into this category, making their positioning a key indicator in assessing whether BTC is headed for a deeper correction or is simply experiencing another market reset.
Data about the chain already indicates a shift. As the chart below shows, Bitcoin’s spot demand is weakening. In March, CVD averages were strong, reaching +$50 million on Binance and +$30 million on Coinbase.
Since then, the buying momentum has cooled significantly, to +$6.5 million and +$5.7 million. At the same time, Bitcoin’s Coinbase Premium Index signals growing selling pressure from US-based investors.
Given the current macroeconomic backdrop, this positioning does not appear temporary.
Instead, as markets increasingly take into account longer-term interest rate expectations, institutional investors appear to be taking a more cautious stance.
In this environment, Bitcoin’s 2.6% pullback was not fully absorbed, indicating that the underlying bid is weakening and the market structure is gradually turning bearish.
If this trend continues, the scenario is reflected by Kalshi traders, who assign an 82% probability of Bitcoin crashing before reaching $100,000, is starting to look more and more reasonable.
Final summary
- Rising inflation and expectations for interest rate hikes are weighing on Bitcoin and other risky assets.
- Declining demand on the spot market and cautious institutional positioning point to a greater risk of a further downtrend in BTC.