Bitcoin Price Forecast: Sticky inflation fears threaten deeper sell-off in BTC

• Bitcoin extends its losses, trading below $61,500 on Wednesday amid renewed US-Iran tensions.
• US-listed spot ETFs recorded outflows of $77.44 million on Tuesday, indicating persistent withdrawals and fueling the selling pressure.
• Investors await the May US CPI report, as a hotter-than-expected inflation reading could reinforce hawkish Fed expectations and accelerate BTC’s decline.

Bitcoin (BTC) extends its decline on Wednesday, trading below $61,500 at the time of writing as renewed US-Iran tensions keep the risk sentiment capped. In addition, persistent capital outflows from US-listed spot Exchange Traded Funds (ETFs) continue to fuel selling pressure on BTC. Market participants are also closely watching the release of the US Consumer Price Index (CPI) data for May later on Wednesday. Sticky inflation figures could reinforce expectations of a more hawkish monetary policy stance from the Federal Reserve (Fed), potentially triggering another wave of selling pressure in the Crypto King.

Renewed Middle East tensions

The US launched self-defense strikes against Iran on Tuesday in retaliation for the downing of a US Apache helicopter in the Strait of Hormuz. In response, Iran’s Islamic Revolutionary Guard Corps (IRGC) said it has targeted an airbase in Jordan hosting US forces, as well as Kuwait and Bahrain, and warned of “a more severe response” if the US aggression continues. 

Furthermore, Iran’s Foreign Minister Abbas Araghchi said that the country’s armed forces would not leave any attack or threat unanswered and warned the US to leave the region or face consequences. This keeps geopolitical risk premiums in play, weighing on risk-sentiment assets such as Bitcoin, which remains under pressure so far this week, trading below $61,500 on Wednesday after reaching a low of $59,130 last week.

US CPI figures could trigger a deeper correction in BTC

The US Bureau of Labor Statistics (BLS) will publish the May Consumer Price Index (CPI) data on Wednesday. The report is expected to show another pick up in consumer inflation, driven by persistently high Oil prices due to the ongoing crisis in the Middle East.

The monthly CPI is forecast to rise 0.5%, following the 0.6% increase recorded in April, while the annual reading is seen climbing to its highest level since May 2023 at 4.2%, from 3.8% in April. Core CPI figures, which exclude volatile food and energy prices, are expected to post an increase of 0.3% and 2.9%, on a monthly and yearly basis, respectively.

Generally, the inflation data shapes expectations for upcoming Fed interest rate path, potentially triggering volatility in the Crypto King. According to the CME Group’s FedWatch Tool, traders are assigning nearly a 75% chance that the US central bank will hike interest rates by the end of this year amid concerns about sticky inflation due to elevated energy prices. However, the US Dollar (USD) bulls seem hesitant and opt to wait for the release of the latest US consumer inflation figures before placing fresh bets. 

If the May inflation figures come in hotter than expected, it could reinforce expectations that the Fed will maintain a hawkish monetary policy stance. This would likely keep interest rates elevated for longer, which generally weighs on risk assets such as Bitcoin. Higher borrowing costs reduce market liquidity and steer markets towards safer, yield-bearing assets, potentially adding to the ongoing selling pressure in BTC.

Institutional sell-off continues

Institutional selling continues so far this week. SoSoValue data shows that spot BTC ETFs recorded an outflow of $77.44 million on Tuesday after $91.37 at the start of the week. Moreover, this outflow trend has remained robust, marking fourth consecutive week of billions in weekly withdrawals. If this trend continues, BTC could see further correction this week.

Bitcoin Price Forecast: Bears still in control of momentum

Bitcoin price trades at $61,567 on Wednesday, maintaining a clear bearish near-term bias as it holds well below the 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs), clustered between roughly $72,037 and $79,398. 

A previous upward trend line, now turned resistance around $73,004, reinforces the notion of a broken medium-term uptrend, while the Relative Strength Index (RSI) hovering near 23 signals oversold conditions that may slow, but not yet reverse, the downside. The Moving Average Convergence Divergence (MACD) indicator remains negative, with subdued downside momentum hinting at consolidation risk rather than a decisive recovery.

On the topside, initial resistance appears at the horizontal barrier near $64,004, followed by the 50-day EMA around $72,037 and the former rising trendline near $73,004. Further up, the 100-day EMA at $74,231 and the 200-day EMA at $79,398 define a dense supply belt before the more distant horizontal cap at $84,410.

With no meaningful support plotted below the current price in this dataset, the pair remains vulnerable to further weakness, and only a daily close back above the $64,004 region would start to ease immediate downside pressure.

(The technical analysis of this story was written with the help of an AI tool.)