Bitcoin is testing a key support zone, and a warning has emerged that further declines could follow if it drops below $75,000.

On May 20, blockchain media outlet CoinPost reported that crypto market maker Wintermute, in a weekly market report, set bitcoin's main price zone at $76,000 to $78,000. It said that if the zone breaks, bitcoin could fall to the low $70,000s.

Wintermute pointed to Nvidia earnings as a short-term variable. If Nvidia results due on May 20 meet market expectations, investor sentiment could partly recover, but downside pressure still dominates in an environment where ETF outflows persist and funding rates are being reset, it said. It also assessed that if bitcoin falls below $75,000, a break of psychological support would raise the likelihood of a move into the $70,000s.

The report described the price outlook as linked not to simple technical analysis but to the macroeconomic environment. Wintermute assessed that, with rising interest rates and fears of re-accelerating inflation both present, buying bitcoin is akin to betting on expectations that institutional investors will return to risk assets. It added that institutional inflows are likely to be limited as long as the macro environment has not eased enough.

Macro indicators are also weighing on the market. The U.S. consumer price index for April rose 3.8 percent from a year earlier, beating market expectations, and the U.S. 10-year Treasury yield rose to 4.58 percent. Rising Brent crude prices are also adding to a renewed focus on inflation pressure. The report assessed that this combination could create an environment that is unfavorable for risk assets overall.

Expectations for monetary policy are also deteriorating. Markets have begun to factor in the possibility that the Federal Reserve could raise rates again this year, and that probability was reported to have risen to about 44 percent. Kevin Warsh, mentioned as a candidate for the next Fed chair, was also cited as a burden because he is assessed as a hawkish hard-liner.

Still, it is not only bearish signals. Wintermute said selling pressure could be limited as crypto holdings on exchanges have fallen to the lowest level in recent years. It also assessed that a steady accumulation trend among long-term holders, along with progress on the U.S. crypto bill 'CLARITY', is a positive factor over the medium to long term.

The market is ultimately in a phase where opposing signals are acting at the same time. ETF outflows and rate burdens are increasing downside pressure, while falling exchange balances and buying by long-term holders are supporting the lower end. As a result, Wintermute assessed that bitcoin's direction is likely to be determined mainly by whether it can defend the $76,000 to $78,000 zone and maintain support at $75,000.

Market participants are watching Nvidia earnings, changes in U.S. rate expectations and ETF fund flows as key variables. Wintermute's warning was interpreted as underscoring that conditions for institutional funds to return to risk-asset markets have not yet been sufficiently formed, beyond a short-term price outlook.