Bitcoin Faces Headwinds as Price Drops Amid US Economic Concerns

Bitcoin’s recent decline amid a backdrop of economic uncertainty is causing concern among investors and traders alike. As of May 19, 2025, the price of Bitcoin (BTC) has dropped by over 1.4% to $102,460, sparking discussions about its future in a shaky economic landscape. The cryptocurrency has also seen a surge in trading volume, rising 94% to $66.6 billion, indicating a revival of selling activity.

Macroeconomic Uncertainty Drives Bitcoin Price Down

The recent downgrade of the US credit rating by Moody’s, from Aaa to Aa1 on May 16, has exacerbated macroeconomic worries, contributing to Bitcoin’s price drop. This rating cut was attributed to rising debt and deficits, leading investors to rethink their strategies in a potentially volatile market. The downgrade has intensified fears of inflation, particularly in light of anticipated tariff policies under President Donald Trump, which have rattled financial markets and pushed Treasury yields higher.

“The 30Y Note Yield is above 5.00% and the 10Y Note Yield is up another +11 bps,” remarked The Kobeissi Letter, a capital markets commentator, highlighting the pressures of rising borrowing costs on consumers and businesses. Many analysts are concerned that without intervention from the Trump Administration, mortgage rates could reach alarming levels, possibly hitting 8%.

Adding to the negative sentiment around Bitcoin is a class-action lawsuit filed against MicroStrategy—the largest corporate holder of Bitcoin. This lawsuit alleges that the executives misrepresented the nature of Bitcoin investments, further destabilizing investor confidence. As reported by Cointelegraph, the lawsuit follows a staggering $5.9 billion unrealized loss expected in the company’s first quarter.

Over $87 Million in Long BTC Positions Liquidated

Accompanying BTC’s price drop is a significant wave of liquidations in the derivatives market. Over the course of just 24 hours, more than $87 million in long Bitcoin positions were liquidated, compared to only $15 million in short liquidations. This trend of liquidations reflects a growing bearish sentiment among traders, and the overall liquidation across crypto assets soared to approximately $674 million.

Historically, this kind of sell-off correlates with previous downturns, such as April 10, when a similar scale of long BTC position liquidations coincided with a notable price drop. Notably, Bitcoin’s open interest (OI) has also surged—up 12% in the last two weeks—reaching close to the all-time high set back in December 2024.

Bitcoin’s Bearish Divergence Indicates Weakness

The current downward trend in Bitcoin’s price is mirroring a bearish divergence seen in its relative strength index (RSI). While BTC experienced a relatively steady climb between May 9 and May 19, the RSI fell during this same period, a classic signal often interpreted as a warning sign to traders that the uptrend may not hold.

Resistance remains strong for Bitcoin in the $104,600 to $109,000 range, and bulls must push past all-time highs to reaffirm bullish momentum. Popular crypto analyst AlphaBTC has noted, “Most likely, it will be a quick correction in markets, so we watch how $BTC reacts and if it can get back above $103K or roll over and head to the low $90Ks first?”

Conclusion: Is a Bitcoin Correction Imminent?

The intersection of macroeconomic concerns, mounting selling pressure, and a class-action lawsuit against MicroStrategy paints a worrying picture for Bitcoin’s short-term trajectory. With prices hovering around $102,460 and trading volume spiking, the coming days will be critical for both traders and long-term investors.

The crypto landscape is tumultuous, and as the market reacts to economic conditions, it emphasizes the importance of vigilant tracking, deep analysis, and informed decision-making in investing. Stay tuned as we monitor these developments and their impact on Bitcoin.

For further reading on Bitcoin trends, check out our recent articles on Bitcoin price movements, Moody’s credit rating impacts, and cryptocurrency market analysis. Remember, every investment carries risk—do your research!