Prediction market traders are showing growing concern that bitcoin’s recent decline is just the beginning, following a drop toward $65,000 this week. Pressure from significant ETF outflows and a decline in institutional interest has left many in the trading community anticipating further falls in value. On the prediction platform Kalshi, traders currently estimate a 66% chance that bitcoin will plunge below $55,000 by the end of the year, while the likelihood of it dipping under $50,000 stands at 50%. Additionally, there is a 31% chance of prices falling below the $40,000 mark.
Similarly, on Polymarket, traders are expressing a parallel sentiment, with their contracts suggesting a 67% probability of bitcoin’s value dropping below $55,000 this year and a favorable chance that it could decline past $50,000. In a further reflection of market sentiment, traders on Polymarket believe there is only a 30% likelihood that bitcoin will outperform gold by the year 2026. While gold has decreased approximately 1.5% over the last month, it has seen a remarkable 33% increase over the past year. In contrast, bitcoin has suffered a significant decline of around 37% over the same period.
The dwindling institutional appetite for bitcoin is further underscored by data from SoSo Value, indicating that traders withdrew $2.4 billion from U.S.-listed bitcoin ETFs in May, followed by an additional $1 billion in just the first two trading days of June. These record ETF outflows signal a continuing trend of investor hesitance toward the leading cryptocurrency.
In a broader analysis, K33 Research highlights that bitcoin is increasingly competing for investor attention against rapidly rising artificial intelligence stocks. Their report suggests that many investors now perceive the opportunity cost of holding bitcoin as prohibitive, especially as AI-related equities achieve significant gains and major stock indices reach record highs. K33’s Vetle Lunde noted that the prevailing market view places a higher value on AI investments rather than bitcoin.
While K33 Research maintains that bitcoin is undervalued compared to equities in the long run, the current sentiment in prediction markets indicates that traders are increasingly bracing for a downturn before any potential recovery. Despite these bearish predictions, it appears that capital is not entirely exiting the cryptocurrency market. Instead, there is evidence that funds are being reallocated towards digital dollars, with market shares of USDT and USDC increasing during bitcoin’s slide. This shift suggests that, rather than buying the dip, traders are opting to hold cash as they await better investment opportunities in the market.
