BTC falls below 79K: U.S. stocks hit new highs, why are cryptocurrencies collectively declining?

On May 13, 2026, the Nasdaq Index and the S&P 500 Index both hit record highs—Nasdaq closed at 26,402.34, up 1.20%; the S&P 500 closed at 7,444.25, up 0.58%. The technology sector remained strong under inflationary pressure, with Nvidia rising for the sixth consecutive day, surpassing a total market value of $5.5 trillion.

However, the crypto market did not benefit simultaneously. According to Gate Market data, BTC fell below 79,000 USDT on May 13, now trading at $79,319 USD, down 1.47% in 24 hours. Ethereum also weakened, trading at $2,258 USD, down 0.73%. Market sentiment quickly cooled, with the Alternative.me Fear and Greed Index dropping from 42 yesterday to 34, returning to the “Fear” zone after several days.

This divergence in asset class performance is not accidental. Understanding why they move in opposite directions is the first step in analyzing the current market logic.

How Inflation Warming and Rate Hike Expectations Are Reshaping Pricing Logic

The macro-level triple shock is the core driver behind the pressure on the crypto market.

The US April CPI annual rate reached 3.8%, higher than the market expectation of 3.7%, with core CPI also exceeding expectations. The subsequent Producer Price Index (PPI) annual rate jumped to 6.0%, the highest since December 2022. Consecutive inflation data exceeding expectations has almost completely ruled out the possibility of the Federal Reserve cutting interest rates in the near term.

Meanwhile, Fed Chair Powell’s term ends on May 15, with his successor Kevin Warsh awaiting Senate confirmation. The policy uncertainty has led institutional funds to adopt a wait-and-see stance. As one of the most liquidity-sensitive asset classes, the crypto market was among the first to feel the pressure.

These factors form a clear transmission chain: persistent inflation → fading rate cut expectations → continued high interest rate environment → pressure on crypto valuations. The US stock market has not been immune to this logic, but the AI narrative in tech stocks provides additional support, creating two different interpretations of the same macro signals for risk assets.

Is There Substantial Support Near $78,000?

In the past 24 hours, BTC has fallen from a high of $81,324 USD to $78,754 USD, forcing liquidations of about 115k traders, with total market liquidations reaching $371 million. The price then rebounded slightly and is now oscillating between $79,000 and $80,000.

From a technical perspective, several support levels are worth noting. The $78,000–$79,000 range is the cost basis for short-term holders—this level has historically been validated as an effective demand zone during multiple corrections. The 20-day moving average is around $79,092 USD, also a key level for short-term traders. If $78,000 is effectively broken, the next support zone to watch is between $75,000 and $76,000, which saw multiple rebounds in Q4 2025.

However, it’s important to note that in a macro environment shifting expectations, the effectiveness of technical supports depends on how markets price macro risks. If inflation data continues to surprise on the upside, any technical support could be penetrated by liquidity contraction.

What Does the Drop to 34 in the Fear and Greed Index Indicate?

What does a reading of 34 mean? Categorically, the Fear and Greed Index ranges from 0–24 for “Extreme Fear,” 25–46 for “Fear,” and 47–54 for “Neutral.” A score of 34 falls in the middle-lower part of the “Fear” zone, still 10 points away from “Extreme Fear.”

Looking at historical data, the strength of signals in extreme zones is much higher than current levels. Over the past five years, when the panic index remained below 25 for seven consecutive days, the 30-day average return was 31.8%, and the 3-month average return was 68.4%. Buying in the 25–30 range yielded an average 30-day return of 18% with a 66% win rate. When the index is in the 30–40 range, the subsequent 30-day return distribution becomes more dispersed, with some cases of continued decline and others of rebound—meaning 34 is not a clear “bottom-fishing” signal but more of a trend confirmation point.

The rapid drop from 42 to 34 within a day is noteworthy. Fast deterioration in sentiment often indicates the market is digesting multiple negative signals at once, potentially accelerating a washout; but it could also mean panic has just begun, requiring more time for proper price discovery.

What Structural Changes Are Occurring in Capital Flows?

While prices are falling, the structural dynamics of capital flows deserve separate attention.

On-chain data shows that exchange-held BTC balances are near multi-year lows, indicating long-term holders have not been selling off massively during recent declines. Meanwhile, Wells Fargo has indirectly purchased about $41.6 million worth of BTC through MicroStrategy. Although individual transactions are limited, the behavior of large traditional financial institutions increasing their holdings during price declines reflects a significant difference in the pricing logic between institutional capital and retail investors.

Bitcoin futures open interest has recently increased, but spot trading volume has fallen to a two-year low. This “rising futures activity, declining spot volume” structure often suggests market participants prefer using leverage to express short-term views rather than making long-term position adjustments in spot markets. This could be a reason for the recent increased volatility.

Additionally, the US Senate Banking Committee will hold a key vote on the CLARITY Act on May 14. If passed, it would be the first comprehensive crypto market legislation in the US, potentially establishing clearer rules for institutional capital entry. Progress in regulatory frameworks is a key variable influencing medium- to long-term investor confidence.

Divergence Scenario: Two Possible Evolution Paths

Based on the above analysis, two reasonable market scenarios can be envisioned.

Scenario 1: Macro pressures continue to dominate. If upcoming economic data further confirms persistent inflation, markets will be forced to reprice the Fed’s interest rate path for the year. In this case, the current fear index of 34 might only be a temporary low, and crypto could further approach the “Extreme Fear” zone. The support validity for BTC would face more severe tests.

Scenario 2: Panic accelerates washout followed by recovery. The rapid decline of the index from 42 to 34 within a single day may indicate the market has already priced in inflation and rate hike expectations. If subsequent data does not further surprise on the downside, panic sentiment could gradually ease. Historically, the 30–40 range is not an explicit buy signal but often marks the exhaustion of downward momentum.

Key observation points include: the outcome of Powell’s reappointment and Warsh’s confirmation on May 15, the release pace of upcoming inflation data, and the legislative progress of the CLARITY Act. Any change in these variables could alter the current divergence pattern.

Summary

On May 14, 2026, Bitcoin fell below the $79,000 USD level, diverging sharply from the new highs in US stocks. The US April CPI and PPI both exceeded expectations, compounded by leadership transition uncertainties at the Federal Reserve, becoming the core drivers of pressure on the crypto market. The Fear and Greed Index dropped to 34, returning to the “Fear” zone after days, but historical data shows that the 30–40 range is not an explicit buy signal but a zone of trend exhaustion. On the capital side, long-term holders have not panicked-sold, but the divergence between futures and spot volumes suggests increased leverage appetite. The legislative progress of the CLARITY Act and macro data trends will be key variables in determining the future direction.

FAQ

Q1: What does a Fear and Greed Index of 34 mean?

34 falls within the 25–46 “Fear” zone, 10 points above the 0–24 “Extreme Fear” zone. This reading indicates market sentiment is pessimistic but has not reached the extreme levels typically associated with medium-term bottoms.

Q2: After BTC broke below $79,000, where is the next key support?

The $78,000–$79,000 range is the short-term cost basis for holders, with the 20-day moving average around $79,092 USD also a key level. If this area is broken, the next support zone to watch is between $75,000 and $76,000, which saw multiple rebounds in Q4 2025.

Q3: What is the macro reason for the divergence between US stocks and crypto?

US April CPI at 3.8% and PPI at 6.0% exceeded expectations, eroding rate cut expectations. As a liquidity-sensitive asset, crypto was pressured first. Tech stocks, supported by AI narratives, responded differently to the same macro signals.

Q4: What are institutional funds doing at current prices?

Wells Fargo recently purchased about $41.6 million worth of BTC via MicroStrategy. Exchange-held BTC balances are near multi-year lows, indicating no widespread panic selling among long-term holders, but the divergence between futures and spot volumes warrants attention.

Q5: How does the historical average return look at a fear index of 34?

Over the past five years, when the index was below 25 for seven days, the 30-day average return was 31.8%, and the 3-month average return was 68.4%. In the 25–30 range, the average 30-day return was 18% with a 66% win rate. The 30–40 range shows more dispersed returns, not an explicit statistical signal.