High U.S. Inflation Data Scares Bitcoin Traders

Weak CPI data triggered a reduction in risk exposure across Bitcoin derivatives markets. Open interest (OI) on major crypto exchanges fell by nearly $1.25 billion, according to CryptoQuant contributor Amr Taha.

Source: CryptoQuant.

According to the analyst, elevated inflation forced investors to close positions, avoid opening new trades, and reduce leverage exposure.

The decline was observed simultaneously across several major derivatives trading platforms, including Binance, Gate.io, Bybit, and OKX. Taha believes this points to a broader reduction in short-term risk across the Bitcoin futures market.

“Higher-than-expected inflation can pressure risk assets because it weakens the narrative of easier monetary policy and pushes traders toward a more cautious strategy,” the analyst explained.

Taha added that in the current context, the drop in open interest may reflect a short-term trader reaction rather than a clear long-term bearish signal:

“When a significant decline in open interest occurs across multiple crypto exchanges following a macroeconomic catalyst, it often indicates that traders are rapidly adapting to new risk conditions.”

State of the Crypto Market

Following the CPI release, Bitcoin dropped from $81,000 to the current $79,000 level — a decline of approximately 2.5%.

15-minute BTC/USDT chart on Binance. Source: TradingView.

On May 13, the United States also released Core Producer Price Index (Core PPI) data. Like inflation figures, the annual reading came in above expectations at 5.2% versus the projected 4.3%.

In March, Core PPI stood at 4%. The latest reading marked the highest level since 2022.

The index measures changes in prices for goods and services while excluding volatile categories such as food and energy.

Alongside another negative macroeconomic factor, CryptoQuant analysts also pointed to rising unrealized profits among Bitcoin traders. The average unrealized profit margin reached 17.7%.

“The last time margins reached these levels was in March 2022, when Bitcoin tested the 200-day moving average just before the downtrend resumed,” analysts warned.

Meanwhile, Michaël van de Poppe, founder of MN Trading, believes Bitcoin currently has no obvious reason to decline further. According to him, the market has adopted a false narrative regarding the formation of a “bear flag” and a potential move toward $50,000 by the end of the year.

See also: "Large Investors Rush to Withdraw Their Altcoin Assets From Exchanges"

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