BIT Research: ETF Purchases Have Slowed, Strategy (MicroStrategy) Has Slowed, What Else Can Drive Bitcoin's Rise?

marsbitPublished on 2026-06-05Last updated on 2026-06-05

Abstract

Market Refocus on Inflation and Rate Expectations Weighs on Bitcoin Currently, the market is in a phase of macro-repricing dominated by inflation and interest rate expectations. Bitcoin, which previously benefited from easy liquidity and low inflation, is seeing its core bullish drivers weaken. These drivers were market expectations for interest rate cuts and strong inflows from Bitcoin ETFs and institutions like MicroStrategy (referred to as "Strategy" in the text). The logic has shifted. Recent high inflation data (e.g., CPI hitting 3.8% in a May 2026 report) has caused the market to sharply reduce its rate cut expectations for 2025 and even price in potential hikes. This is a key constraint for Bitcoin, as it lacks cash flows and is highly sensitive to rate expectations. Concurrently, institutional capital flows have slowed significantly. Following the hot CPI data, Bitcoin ETFs saw accelerated outflows, with around $4.3 billion leaving over a period. MicroStrategy's ability to keep adding substantial Bitcoin to its balance sheet is also diminishing. Together, ETF and MicroStrategy holdings total roughly $110 billion, but their momentum as growth engines is cooling. In summary, Bitcoin's current pressure stems not from its own fundamentals but from a changing macro environment. As long as inflation stays elevated, Bitcoin is likely to remain in a consolidating phase. However, historically, inflation eventually peaks. Once it recedes and rate cut expectations rebuild, i...

The current market is in a macro repricing phase dominated by inflation and interest rate expectations. For over a decade, Bitcoin benefited from an environment of loose liquidity coexisting with low inflation, which continuously reinforced its narrative as a "hedge against monetary dilution." However, with institutional capital steadily entering, Bitcoin's pricing logic is shifting, becoming increasingly dependent on interest rate expectations and capital flows.

Judging from recent market performance, Bitcoin's recent weakness does not stem from a deterioration in its own fundamentals but rather from the waning of two core drivers behind this bull run. On one hand, market expectations for rate cuts are being persistently revised lower. On the other hand, incremental inflows from Bitcoin ETFs and corporate purchases (led by MicroStrategy, abbreviated as Strategy in some contexts) have begun to slow. Against this backdrop, pressure on Bitcoin is mounting, and its subsequent trajectory will still depend on changes in inflation and the Federal Reserve's policy path.

Resurgent Inflation: Interest Rate Expectations Become Bitcoin's Biggest Constraint

Post-pandemic fiscal stimulus altered monetary transmission mechanisms. Funds not only pushed up asset prices but also flowed into the real economy, leading to a significant rise in inflation approximately 18 months later. In June 2022, U.S. CPI hit a high of 9.1%. Subsequently, inflation continued to decline, falling to 2.4% in September 2024, which continuously bolstered market expectations for rate cuts and provided crucial support for Bitcoin's rise.

However, this logic began to change towards the end of 2024. As market concerns about resurgent inflation grew, expectations for rate cuts continued to recede. Market pricing for 2025 rate cuts decreased from approximately 6 cuts priced in September 2024 to nearly zero cuts by January 2025. Although it later recovered to around 2.6 cuts, when CPI hovered near 3% again, the market turned cautious once more. The CPI data released on May 12, 2026, came in at 3.8%, prompting the market to even start pricing in about 1.8 rate hikes again.

For stocks, higher inflation may still be partially absorbed through nominal revenue and earnings growth. But Bitcoin lacks cash flow and earnings support, making it more sensitive to changes in interest rate expectations. When the market reprices a higher interest rate path, Bitcoin often bears the brunt of the pressure.

Slowing ETF and Institutional Flows: Both Engines of the Bull Market Cool Simultaneously

In this cycle, Bitcoin ETFs have been one of the most significant sources of incremental capital. Since anticipation of ETF approval heated up in 2023, institutional capital became the core force driving the market higher. However, as the Federal Reserve's policy stance turned more hawkish, inflows have noticeably slowed. Entering 2026, Bitcoin ETFs have experienced sustained net outflows, with investor appetite for accumulation significantly declining.

Especially after the CPI data release on May 12, 2026, ETF outflows intensified markedly, with cumulative outflows reaching approximately $4.3 billion. In the following 15 trading days, net selling was recorded on 14 days, indicating institutional capital's caution in a high-inflation environment. Concurrently, while MicroStrategy (referred to as Strategy in some contexts) and Bitcoin ETFs have collectively accumulated roughly $110 billion worth of Bitcoin, the room for further accumulation by MicroStrategy is gradually narrowing, and its role as the second-largest capital engine is also weakening.

With ETF inflows stalling, institutional allocation appetite declining, and MicroStrategy's accumulation momentum slowing, the two core drivers that supported this bull run are showing signs of cooling, creating greater resistance for a Bitcoin rebound.

Overall, the primary challenges facing Bitcoin currently do not stem from within the industry but from changes in the macro environment. The loose liquidity and rate cut expectations that supported the market's rise in the past are fading, while institutional capital remains cautious about high inflation and potentially higher rates. In the short term, as long as inflation remains elevated, Bitcoin is likely to continue consolidating. However, looking at historical cycles, inflation eventually peaks. Once inflation recedes and rate cut expectations are restored, institutional capital may flow back in, potentially ushering in a new and more forceful recovery phase for Bitcoin.

 

Related Questions

QAccording to the article, what are the two core drivers of the current Bitcoin bull market that are showing signs of weakening?

AThe two core drivers are: 1) Inflation cooling and the resulting expectations for interest rate cuts by the Federal Reserve. 2) Significant incremental capital inflows from Bitcoin Spot ETFs and large corporate buyers like MicroStrategy (referred to as 'Strategy' in the article).

QWhy is Bitcoin's price particularly sensitive to changes in interest rate expectations compared to stocks?

ABitcoin is more sensitive because it lacks underlying cash flows or earnings. Therefore, its value cannot be partially justified or 'digested' through nominal income and profit growth like stocks can in a higher inflation environment. Its price is more directly influenced by changes in the discount rate and macroeconomic liquidity conditions.

QWhat specific data point from May 12, 2026, mentioned in the article, triggered a sharp shift in market expectations and accelerated ETF outflows?

AThe CPI (Consumer Price Index) data released on May 12, 2026, which came in at 3.8%. This reignited inflation concerns, leading the market to start pricing in approximately 1.8 interest rate *hikes* instead of cuts, and caused a significant acceleration in Bitcoin ETF fund outflows.

QWhat is the total estimated amount of Bitcoin that ETFs and MicroStrategy ('Strategy') have cumulatively allocated, as stated in the article?

ABitcoin ETFs and MicroStrategy ('Strategy') have cumulatively allocated approximately $110 billion worth of Bitcoin.

QWhat does the article suggest is the primary condition needed for Bitcoin to potentially see a new, more forceful recovery rally?

AThe article suggests that for a new, forceful recovery, inflation needs to peak and begin to decline. This would allow expectations for Federal Reserve interest rate cuts to rebuild, which in turn could prompt institutional capital to flow back into Bitcoin and related investment vehicles.

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