Bitcoin Dips Below $79,000 as Inflation Fears Hit Risk Assets; $71K-$65K Support Zone Eyed

Bitcoin's May rally hit a speed bump on May 15 as risk-off sentiment swept through equities and bonds. The largest cryptocurrency fell below $78,600, triggering liquidations of approximately $274 million in long positions on margin as traders repriced inflationThe rate at which prices rise across an economy. and rate-hike odds. The move was sharp but not unprecedented; Bitcoin remains modestly up on a weekly timeframe despite the Friday rout. However, the break below what traders regard as a key short-term control point has raised questions about the sustainability of the rally that lifted BTC from $70,000 in late April to $84,000 just days earlier.

On-chain metrics paint a more nuanced picture. The Fear and Greed Index stands at 34, signaling fear but not yet capitulation (which would register below 20). More importantly, the MVRV Z-Score sits near 1.0, indicating that Bitcoin is structurally nowhere near a cycle peak; holders are only marginally underwater on average cost basis. Glassnode's Network Growth metric is rebounding and nearing a key bullish inflection above 60, hinting that the bottom of a local correction may be forming. Large liquidity clusters sit at $92,000-$98,000 above and $71,000-$65,000 below, confining near-term trading ranges.

The macro backdrop remains supportive for Bitcoin's longer-term thesis despite near-term volatility. Bitcoin has decoupled positively from equities during the Iran war shock, rising 20 percent since the conflict erupted while gold fell 11 percent. This suggests that traders are rotating into Bitcoin as a hedge against monetary debasement and geopolitical uncertainty, not as a traditional risk asset. Long-term holder supply in loss is rising toward 2018 and 2015 peaks, a sign that patient capital is consolidating rather than capitulating.

The critical test is whether $71,000-$65,000 support holds. If it breaks, BTC could probe $60,000-$55,000, wiping out the year-to-date gain. However, if buyers defend the zone and inflationThe rate at which prices rise across an economy. eventually stabilizes, Bitcoin's prior strength could resume. The next 48 hours are critical; weekend volatility often shakes out weak hands, but Monday open could see stabilization if equities and bonds find equilibrium.