The United States and the broader global economy are facing an increasingly fragile macroeconomic backdrop. U.S. inflation has risen to 3.8% year-over-year, per April consumer price index (CPI) data, and real wages have turned negative with long-term Treasury yields climbing to multi-year highs.
Amid a hostile macro environment, bitcoin (BTC) has pulled back and erased the gains from its early-month rally. This correction is further driven by weakening institutional demand and outflows from spot exchange-traded funds (ETFs).
Weakening Institutional Demand
According to this week’s Bitfinex Alpha report, the U.S. macro backdrop has shifted toward a “higher-for-longer inflation environment.” Market expectations for Federal Reserve rate cuts have been removed, with rate hikes becoming a more likely scenario as the year progresses.
With the possibility of renewed tightening rising, bitcoin is losing momentum and becoming more vulnerable to exogenous shocks and to a high-for-longer int
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