Hotter CPI tests Bitcoin’s US$80K (A$110K) support

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Introduction

Oil prices surged and Treasury yields climbed after hotter-than-expected US inflation data complicated the outlook for interest rates. Bitcoin briefly slipped below US$80,000 (A$110,400) as traders reacted to rising geopolitical tensions and renewed pressure across risk assets. The Nasdaq fell 0.9% following the release, while crypto markets turned sharply lower through the session.

Even so, capital continued flowing into the sector. ETF inflows extended for another week, large Bitcoin holders added to positions, and Ethereum remained central to the growing tokenised asset market.

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State of crypto

• Bitcoin briefly traded below US$80,000 (A$110,400) after hotter US inflation data
• US CPI rose to 3.8% as Brent crude climbed above US$106 (A$146) amid Iran tensions
• Crypto investment products recorded US$858 million (A$1.18 billion) in weekly inflows
• More than US$1.4 billion (A$1.93 billion) in Bitcoin short positions were liquidated
• JPMorgan expanded its Ethereum tokenisation push through a new blockchain fund
• Senate confirmation of Kevin Warsh as Fed Chair renewed focus on future US crypto policy

US inflation and oil prices pressure risk assets

The latest US CPI print became the market’s focus this week after inflation rose to 3.8%, its highest level in three years. Producer prices also accelerated, reinforcing expectations that the Federal Reserve may need to keep policy tighter for longer.

Energy markets contributed heavily to the move. Brent crude climbed above US$106 (A$146) as tensions involving Iran and the Strait of Hormuz intensified. The Nasdaq fell 0.9%, while the S&P 500 slipped 0.2% following the release.

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Bitcoin defends US$80K (A$110K) as volatility accelerates

Against this backdrop, Bitcoin briefly moved below US$80,000 (A$110,400) before stabilising as buyers returned near support. The level has become one of the market’s key short-term reference points heading into the next round of US economic data.

More than US$1.4 billion (A$1.93 billion) in Bitcoin short positions were liquidated this week after traders positioned too aggressively for further downside. The move triggered a rapid unwind in bearish positioning and helped prices recover from session lows.

Some analysts believe the recent rally has relied more heavily on derivatives activity and short covering than sustained spot demand. Still, Bitcoin has continued holding above major support levels despite increasingly difficult macro conditions.

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ETF inflows extend for seventh consecutive week

While short-term positioning shifted rapidly, ETF demand remained firm. Crypto investment products recorded US$858 million (A$1.18 billion) in weekly inflows, extending the current streak to seven consecutive weeks.

Bitcoin ETFs have now attracted roughly US$3.4 billion (A$4.69 billion) during that period. Holdings across ETFs, custodians, public companies, and large allocators also climbed to around 3.24 million BTC, worth approximately US$261 billion (A$360 billion). Strategy continued adding to its Bitcoin position this week, pushing the company’s holdings close to 4% of circulating supply.

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JPMorgan and BlackRock expand Ethereum tokenisation push

Beyond Bitcoin, Ethereum remained at the centre of the tokenised asset market this week. JPMorgan filed for JLTXX, a tokenised money market fund built on Ethereum, following BlackRock’s earlier push into tokenised treasury products. The tokenised real-world asset sector has now grown beyond US$32 billion (A$49.5 billion), with Ethereum accounting for roughly 54% of the market.

Charles Schwab also introduced spot Bitcoin and Ethereum trading access for millions of brokerage clients, further narrowing the gap between traditional finance and digital assets.

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Kevin Warsh and CLARITY Act drive crypto policy discussion

Regulatory developments also drew attention this week after Senate confirmation of Kevin Warsh as Fed Chair reignited discussion around the future direction of US crypto policy.

Meanwhile, the CLARITY Act advanced further through the Senate process despite ongoing political debate and proposed amendments. If passed, the legislation would provide one of the first comprehensive regulatory frameworks for digital assets in the United States. The discussion around crypto regulation is becoming increasingly difficult for policymakers to ignore as Wall Street participation continues expanding.

Crypto Fear & Greed Index

Source: Fear & Greed Index

Announcements

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The week ahead: Economic events

Thursday, May 14th

• Australia Consumer Confidence MoM
• United Kingdom GDP Growth Rate, GDP Annual Growth Rate, Monthly GDP MoM
• US Retail Sales

Monday, May 18th

• China Industrial Production, Retail Sales YoY

Tuesday, May 19th

• Japan GDP Growth Rate
• Australia Interest Rate
• United Kingdom Unemployment Rate
• Canada Inflation Rate

Wednesday, May 20th

• United Kingdom Inflation Rate

Source: Trading Economics

Market reflections

• United States: Top brokerages diverge on timing and scale of Fed rate cuts
• Europe: EU weighs windfall tax on energy firms linked to war-driven profits
• China: Trump and Xi consider tariff cuts on US$30 billions of imports
• Japan: OECD expects Japan’s interest rate to reach 2% by end-2027
• Australia: Housing market faces cooling pressure from proposed tax reforms

Markets moved through another week of mixed economic signals as investors weighed shifting rate expectations, trade negotiations, and fiscal policy developments across major economies. Central banks remain at different stages of the policy cycle, while governments continue balancing inflation pressures, growth concerns, and political priorities. The result has been a more fragmented macro backdrop that continues to shape sentiment across equities, commodities, and digital assets.

In the United States, Wall Street brokerages are becoming increasingly divided on the Federal Reserve’s path for 2026. Some firms still expect rate cuts by mid-year, while others believe stronger economic data and persistent inflation pressures could delay easing further. The growing divergence highlights how uncertain markets remain around the pace of disinflation and the durability of US economic growth. Investors continue recalibrating expectations around how long rates may need to stay restrictive.

Across Europe, finance ministers are discussing a potential tax on excess profits earned by energy companies during the war-driven energy shock. Policymakers are considering whether part of those gains should be redirected toward public spending priorities and economic support measures. The proposal arrives as Europe continues managing weaker growth conditions, fiscal pressures, and longer-term energy security concerns. Markets are also assessing how additional taxation could affect investment appetite across the regional energy sector.

Chinese trade relations returned to focus after reports that US President Donald Trump and Chinese President Xi Jinping are considering tariff reductions on roughly US$30 billion (A$46.4 billion) worth of imports. The discussions form part of a broader managed trade approach aimed at stabilising relations between the world’s two largest economies. While negotiations remain ongoing, markets responded positively to signs that both sides may be open to easing trade tensions after years of tariffs and supply chain disruptions.

Japan’s monetary policy outlook also drew attention this week after the OECD projected that the Bank of Japan could raise interest rates to 2% by the end of 2027. The forecast reinforces expectations that Japan is gradually moving away from decades of ultra-loose monetary policy as inflation and wage growth strengthen. Higher rates could support the yen and reshape global capital flows, particularly as Japanese investors reassess overseas allocations that benefited from years of low domestic yields.

Meanwhile, Australia’s proposed tax reforms are expected to reduce some momentum in the housing market as policymakers attempt to improve affordability and moderate speculative demand. Economists believe the measures could ease upward pressure on property prices, although the impact may vary across regions and housing segments. The developments come as the Reserve Bank of Australia continues monitoring inflation, consumer spending, and housing activity as part of its broader policy outlook.

For digital asset markets, the week reinforced how closely crypto sentiment remains tied to global macroeconomic conditions. Diverging rate expectations, trade policy developments, and fiscal reforms continue influencing liquidity conditions and investor positioning across risk assets. As policymakers across major economies take increasingly different approaches, volatility may remain elevated across currencies, equities, and digital asset markets in the months ahead.

Final thoughts 

Bitcoin’s ability to hold above US$80,000 (A$110,400) will remain the key level to watch heading into next week, particularly as inflation and energy markets continue driving sentiment across global markets.

Despite the recent volatility, money continues flowing into the sector through ETFs, treasury allocations, and tokenised asset projects tied to major financial firms. That disconnect between cautious market sentiment, and steady institutional buying remains one of the more notable themes in crypto right now. The near-term environment may stay uneven, but interest from larger allocators has yet to slow.

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Online safety: How to stay safe when you receive threatening or high-pressure messages

Some messages or calls use intimidation, urgency, or fear to pressure people into making payments or sharing personal information. These communications may appear convincing and can sometimes impersonate trusted organisations or service providers.

In some cases, the sender may claim there is an issue with your account, suspicious activity, or a payment that must be resolved immediately. Others may pressure you to transfer cryptocurrency or provide sensitive information before you have time to verify the request independently.

What to watch out for

• Unexpected calls, texts, or emails demanding urgent action or payment.
• Requests for payment through unusual methods such as cryptocurrency, gift cards, or wire transfers.
• Messages claiming to be from banks, government agencies, delivery providers, or support teams.
• Requests for passwords, verification codes, or sensitive personal information.
• Aggressive language, threats, or repeated pressure to act immediately.

How to stay safe

• Stay calm and avoid responding to threatening or high-pressure requests immediately.
• Verify the request directly through official contact channels.
• Never share passwords, verification codes, or sensitive personal information.
• Avoid clicking unexpected links or downloading attachments from unknown senders.
• Block and report suspicious callers or messages where appropriate.

If you believe you have shared information or made a payment, secure your accounts immediately and contact your financial institution.

Protect yourself and others. Learn more at scamwatch.gov.au.

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