RYPTO MARKET DECLINES EVEN AS BITCOIN HITS $107K – WHAT’S DRIVING THE DROP?

The cryptocurrency market experienced an unexpected pullback even as Bitcoin (BTC) briefly soared to an all-time high of over $107,000. Despite this milestone, the broader market sentiment turned cautious, with several altcoins registering losses and investors appearing wary. What explains this counterintuitive reaction?

1. Profit-Taking Pressure

Bitcoin’s surge triggered a wave of profit-taking as traders capitalized on the rally. This typical market behavior at new highs led to a sell-off that pushed BTC back to around $103,000. The correction rippled across altcoins, many of which saw 3–7% losses.

2. Inflation Data Uncertainty

Investor caution is also tied to upcoming U.S. inflation data, which could significantly influence the Federal Reserve’s monetary policy. Elevated inflation may delay rate cuts or trigger further hikes—scenarios that tend to make risk assets like crypto less appealing, leading many investors to the sidelines.

3. Drop in ETF Inflows

Spot Bitcoin ETF inflows, a key indicator of institutional interest, have dropped sharply. After $334.58 million in inflows on May 9, the figure declined to just $5.10 million by May 12. This reduction weakens the momentum that had fueled BTC’s recent rally.

4. Coinbase Security Breach

A security incident at Coinbase further weighed on sentiment. The breach, involving compromised third-party support agents, exposed user data and could cost the exchange up to $400 million, raising concerns about ecosystem reliability.

5. Regulatory Enforcement

Authorities also intensified crackdowns on illicit crypto activity, shutting down major operations like Haowang Guarantee. While positive long-term, such actions can trigger short-term volatility.

Market Snapshot:

• BTC Price: ~$103,043

• Daily Range: $106,540 / $103,043

• Altcoin Losses: ETH, BNB, SOL down 3–7%