Bitcoin Price Fluctuations Continue as Market Watches for Sustained Recovery

Bitcoin's price fluctuations have been a subject of interest in the crypto market, particularly after it briefly fell below $80,000. This decline was triggered by hotter-than-expected US inflation data and geopolitical tensions. The asset has since recovered above the psychological level, but its ability to sustain a healthy recovery is uncertain.

The inflation data showed that US CPI rose to 3.8% year over year in April, above the expected 3.7%. This led to higher Treasury yields and reduced expectations for Federal Reserve rate cuts in 2026. The risk sentiment also weakened, putting pressure on Bitcoin's price. However, larger Bitcoin holders continued to accumulate even as smaller retail wallets reduced exposure.

Derivatives data points to a market that is not yet fully committed to another breakout. Open interest fell from about $29.09 billion on May 5 to $26.84 billion on May 11, a decline of roughly 7.75%. Lower open interest shows that leveraged positions have been reduced. Funding rates also turned negative and intensified, reflecting bearish positioning in derivatives markets.

Analysts are watching spot demand and short squeeze risk to determine if the recent move is a genuine breakout or just a short-term relief rally. Wintermute noted that Bitcoin's recent move above $80,000 looked more like a short squeeze than a healthy breakout. The firm also pointed out that open interest rose from about $48 billion to $58 billion over the past month while spot volumes remained near two-year lows.