Bitcoin's price has continued its recent weakness, falling to its lowest level since U.S. President Trump took office. Trading data from crypto prediction markets suggests the world's largest cryptocurrency may still face further downside risks this year. Data indicates that since hitting an all-time high above $126,000 last October, Bitcoin has experienced a cumulative pullback of approximately 40%. Market momentum, its underlying narrative, and its perceived status as a "safe-haven asset" appear to be simultaneously eroding. The current Bitcoin price is around $73,200.
Contract trading on the decentralized prediction platform Polymarket reflects notably bearish investor sentiment. Data from the platform shows the market currently implies an 82% probability that Bitcoin will fall to $65,000 this year, a level roughly 13% below the current price. More pessimistic bets are also gaining traction: the probability of Bitcoin breaking below $55,000 has risen to about 60%, while the chance of a price rebound to $100,000 has dropped from 80% at the start of the year to 54%.
Bearish sentiment is even more pronounced in short-term contracts. A February contract on Polymarket indicates the market's expectation for Bitcoin to fall below $70,000 before March 1st has surged to 72%, an increase of over 35 percentage points since the beginning of the month. Approximately $1.7 million is wagered on this outcome, highlighting deepening pessimism among traders amid ETF outflows and a breakdown in macroeconomic correlations.
Ilan Solot, an analyst at Marex, stated that this price action "largely reflects the current bearish sentiment in the market," which includes factors such as Bitcoin's recent failure to act as a safe haven. Market sentiment has remained subdued since an unexpected weekend crash in early October triggered the liquidation of billions in leveraged positions, with token prices failing to stage a sustained recovery. A fresh wave of selling last weekend further darkened the mood.
The total market capitalization of the global cryptocurrency market is currently around $2.5 trillion, a significant contraction from its peak of over $4 trillion last October. Dan Morehead, founder of Pantera Capital, pointed out that the downturn has been particularly brutal for leveraged investors, noting that "the amount of capital destroyed on October 10th far exceeded the drawdown in November 2022," causing substantial pain and leading to the long-term exit of some investors.
Regarding capital flows, a key driver of last year's Bitcoin rally—inflows into crypto ETFs—has noticeably weakened. Data shows that crypto ETFs listed in the U.S. have seen cumulative net outflows approaching $4 billion over the past three months. Research from Glassnode and K33 indicates that the average trader is now in a loss-making position.
Citi analyst Alex Saunders noted in a report that inflows into U.S. spot ETFs have cooled significantly, removing an important source of new market demand. "Amid a lack of new demand, long-term holders are also beginning to worry about Bitcoin's cyclical weakness," the report suggested.
It is noteworthy that the collective "wisdom" of prediction markets stands in stark contrast to some bullish views on Wall Street. Prominent investor Tom Lee predicted last November that Bitcoin could rebound to between $150,000 and $200,000, an expectation that has not materialized. Although institutions like Standard Chartered and Bernstein have revised some forecasts downward, they still believe Bitcoin could reach $150,000 by year-end, betting the market will ultimately experience a meaningful rally.
Comments