Live updates: Bitcoin and stocks trim big early losses after soft U.S. inflation data

The May U.S. Consumer Price Index (CPI) rose 0.5% versus 0.5% expected and April’s 0.6%. On a year-over-year basis, CPI was at 4.2% versus 4.2% expected and 3.8% last month.

Core CPI — which excludes food and energy costs — rose just 0.2% in May against forecasts for 0.3% and 0.4% in April. Year-over-year core CPI was running at 2.9% versus 2.9% expected and 2.8% in April.

Bitcoin was adding a bit on the modestly softer-than-expected core CPI number, now trading at $61,500.

U.S. stock index futures are also trimming losses, the Nasdaq 100 is lower by just 0.8% versus down 1.5% just before the print.

Bitcoin (BTC) is heading toward a major profitability reset typically observed in final phases of bear markets, according to onchain data tracked by CryptoQuant.

Right now, the percentage of bitcoin supply that’s still in profit is dropping close to 45%. Here’s why it matters: Historically, when this number falls that low, it means that majority of holders are now underwater – the current price is less than their acquisition cost.

This isn’t just affecting a few people; the pain is spreading across the entire market as the recent price crash wipes out unrealized gains for a large share of investors, leaving fewer than 50% in profit.

It is representative of a classic late-stage downtrend. At the bull market peak, over 90% of all bitcoin was usually in profit and everyone felt bullish. Now, as we approach the 45% level, sentiment is shifting toward fear and pessimism.

The good news? These resets often clear out weak hands and speculative buyers. Coins slowly move from stressed sellers into the hands of stronger, long-term investors during a drawn-out bottoming process. process that typically sets the stage for the next bull run.

“From an on-chain perspective, profitability compression often serves as a mechanism that removes speculative excess from the market. As weaker holders exit positions under pressure, coins gradually migrate toward investors with longer investment horizons. This redistribution process can create short-term volatility but has historically contributed to healthier market structures over time,” Cryptoquant’s analyst noted.

A quick pulse check.

Bitcoin (BTC) has been trading sideways for the last 24 hours, since falling near $61,000 yesterday.

More interesting action is in the altcoin space right now. While most of the large names, such as ZCASH and HYPE, are the biggest losers in the last 24 hours, one name that stands out among the outperformers is Morpho. The token MOPRHO is up about 14%, outpacing most altcoins, according to CoinDesk data.

Yesterday, the blockchain-based lending protocol said it raised $175 million in a funding round co-led by Paradigm, a16z crypto and Ribbit Capital. The funding comes at a time when most crypto projects are treading water amid the bear market.

What’s interesting about the raise is that Morpho operates an open credit network that allows institutions and fintech firms to build lending products on blockchain rails. The $175 million in backing is a bet that all of Wall Street will eventually move credit products onchain.

This raise is likely another signal that TradFi doesn’t care what the market is doing. They see the potential of blockchain technology, and they will continue to build for the future, bear market or not.

And that’s the difference between what the real “Wall Street taking over crypto” looks like and what crypto degens thought it would be. They aren’t buying everyone’s bags; they are carefully betting on the future.

Bitcoin’s mining difficulty is expected to decline by roughly 11% on June 14, marking the largest downward adjustment since February.

Bitcoin difficulty is a self-regulating mechanism that automatically adjusts every 2,016 blocks, approximately every two weeks, to ensure new blocks continue to be mined at an average rate of 10 minutes, regardless of changes in network computing power.

The anticipated reduction follows a notable decline in bitcoin’s hash rate, which measures the total computational power securing the network. The seven-day moving average of Bitcoin’s hash rate has fallen to around 910 exahashes per second (EH/s), down from its all-time high of 1.1 zettahashes per second (ZH/s) recorded in October.

The decline appears to be driven by multiple factors.

Rising energy costs, partly linked to geopolitical tensions with Iran, have increased miners’ operating expenses. At the same time, several publicly listed U.S. mining companies have redirected infrastructure and capital toward artificial intelligence (AI) and high-performance computing (HPC) businesses.

This shift has reduced the resources dedicated to Bitcoin mining, with some operators scaling back or exiting mining in favor of AI-focused opportunities.

Oil market panic has sharply cooled in a positive sign for risk assets, including cryptocurrencies.

The CBOE Oil Volatility Index (OVZ) has dropped back to 57.63%. That’s exactly where it stood in the final week of February before the Iran war began, according to data source TradingView.

This reverses the dramatic spike above 120% that followed the outbreak of conflict, indicating that energy market fears have largely subsided.

This normalization in oil volatility should provide relief for risk assets previously disrupted by wild energy swings. Bitcoin, however, is moving in the opposite direction, with its 30-day implied volatility (BVIV) surging from 36% to a high of 59% since early last week. The index currently sits around 50%.

Rapid outflows from spot ETFs, Strategy’s BTC sales, and growing unease over inflation and the AI-driven market frenzy have triggered a sharp pullback in bitcoin prices, lifting volatility expectations.

David Nicholas, CEO and Founder of XFUNDs by Nicholas Wealth and portfolio manager of several actively managed ETFs including BLOX, which maintains bitcoin as a core holding, views the current bitcoin market as technically damaged.

He notes that BTC is trading roughly 20% below its 50-day moving average, a situation he describes as a “broken chart.” This significant deviation has prompted Nicholas to maintain defensive hedges on the position while monitoring for signs of stabilization.

As of writing, bitcoin changed hands near $61,400, with the 50-day simple moving average at $75,020, according to CoinDesk data.

Despite acknowledging oversold conditions that could fuel a short-term bounce, Nicholas remains cautious. According to him, at least a 20% recovery is needed to turn bullish on BTC, yet even that move would still leave price action well below the 200-day moving average.

Other traders have mentioned levels ranging from $68,000 to $80,000 as thresholds that need to be breached for a bull revival.