Bitcoin cools temporarily amid the crosscurrents of expectations

30 May 2025

Bitcoin cools temporarily amid the crosscurrents of expectations and risks

Written by Linh Tran, Market Analyst at XS.com

Bitcoin (BTC) has just experienced three consecutive losing sessions, reflecting profit-taking pressure following a strong rally that began in early April. However, the current price action appears to be more of a natural technical correction within a broader uptrend, rather than a signal of a fundamental trend reversal. The long-term momentum of the cryptocurrency market remains intact, supported by a confluence of positive structural factors.

This correction is being reinforced from a macroeconomic perspective. The economic data released yesterday offered little support for Bitcoin and even exerted slight pressure on overall market sentiment. U.S. Q1 GDP unexpectedly contracted by 0.2%, sparking recession concerns, although it could also increase expectations for policy easing by the Fed. Meanwhile, initial jobless claims rose to 240,000—higher than forecast—signaling labor market weakness. However, the data was not weak enough to significantly shift expectations toward imminent rate cuts.

One of the key pillars supporting Bitcoin at the moment is the policy landscape. A recent U.S. court ruling rejecting several controversial tax proposals from the Trump administration has temporarily removed some regulatory risks for digital assets. This decision creates a more constructive environment for market sentiment to recover, especially as institutional investors increasingly demand legal clarity and transparency in the regulatory framework for crypto.

In addition, institutional capital continues to play a leading role in the market, clearly evidenced by consistent net inflows into spot Bitcoin ETFs since mid-April. This not only reflects sustained investor confidence but also signals Bitcoin’s growing status as a mainstream asset in long-term investment portfolios—transitioning from a speculative instrument to a strategic allocation.

However, Bitcoin’s outlook remains constrained by geopolitical risks. The Russia–Ukraine conflict continues to stall, with diplomatic efforts showing no substantive progress. Against this backdrop, Bitcoin—as a high-risk asset—is vulnerable to global risk-off sentiment should tensions escalate further. This remains a key factor to monitor in the coming weeks, especially if geopolitical uncertainty broadens and triggers widespread defensive positioning.

The U.S. core PCE price index, a key gauge of inflation closely watched by the Fed, is due later today. If core inflation proves higher than expected, it could delay the timeline for rate cuts, thereby pressuring non-yielding assets like Bitcoin. Conversely, a cooler-than-expected reading may reinforce policy easing expectations and provide a positive psychological boost to the crypto market.

Overall, Bitcoin’s medium-term trend continues to be supported by institutional inflows and a gradually stabilizing regulatory environment. However, geopolitical uncertainty may act as a short-term headwind, potentially prompting a further correction before the broader uptrend resumes. Investors should remain flexible and closely track policy developments and capital flows to assess the sustainability of the current trend.