Key Takeaways:
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Bitcoin ETF outflows and a 31% decline from the height have raised doubts, but metrics suggest institutional investors are usually not abandoning Bitcoin.
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Bitcoin's shifting correlation with gold and consistent volatility suggest that price behavior stays intact despite short-term market pressures.
Bitcoin (BTC) gained 3% on Tuesday after selling off to $85,000 on Monday. A surge in outflows from spot Bitcoin exchange-traded funds appears to point that demand from institutional investors has waned because the Oct. 10 crash. This reduces the probabilities of Bitcoin trading above $100,000 by the top of the yr.
Spot Bitcoin ETF Daily Net Inflows, USD. Source: Coinglass
Spot Bitcoin ETFs recorded net outflows of $358 million on Monday, marking the biggest every day outflow in over three weeks. The move fueled speculation that institutional investors may reduce their exposure after breaking the psychological support level of $90,000.
More importantly, Bitcoin is currently trading 31% below its all-time high of $126,219, a decline that might signal the top of the bullish phase that lasted into October.
Source: X/forcethehabit
According to X user “forcethehabit”, Bitcoin's decline doesn’t represent a reversal as rate of interest cuts have been delayed and the US Federal Reserve (Fed) has reduced its balance sheet for longer than expected. The evaluation also notes that institutional capital is being injected primarily through ETFs and company reserves, while a rotation into riskier and more illiquid assets continues to be pending.
Bitcoin has an inconsistent correlation in comparison with gold
The correlation between Bitcoin and the worth of gold may be used to evaluate whether the cryptocurrency is viewed as a substitute store of value or just a proxy for riskier assets. The digital gold story has been a key driver of Bitcoin’s bullish run in 2025.
Bitcoin/USD (blue) vs. Gold/USD (red). Source: TradingView
More essential than the 48% underperformance in comparison with gold since July is how Bitcoin tracks the weekly movements of gold prices. The 60-day correlation metric has fluctuated between positive and negative since May, indicating little correspondence between Bitcoin and gold price trends. Still, there isn’t any doubt that Bitcoin traders are disenchanted by the rejection after losing the $110,000 mark.
While such data could seem pessimistic at first glance, the 31% drop in Bitcoin price since October has had no impact on the correlation metric. This weakens the argument that institutional investors have modified their perception of risk. Bitcoin could still thrive as an independent and decentralized economic system, at the same time as gold stays the world's largest store of value with an estimated market cap of $30 trillion.
It also seems premature to conclude that institutional money has abandoned Bitcoin based on a 10-week correction alone, especially since Bitcoin has outperformed the S&P 500 index by 7% over the past 18 months. While this difference could seem modest, Bitcoin's options risk profile is broadly according to that of Nvidia (NVDA US) and Broadcom (AVGO US), two of the world's eight largest corporations by market value.
Bitcoin 3-month options implied volatility. Source: Laevitas.ch
Bitcoin options implied volatility peaked at 53% in November, roughly according to Tesla's (TSLA US) current levels. When traders expect large price swings, this metric increases to reflect the upper premiums charged for call (buy) and put (sell) options. Market makers are inclined to reduce risk when surprise price movements are more likely; However, this doesn’t necessarily mean that investors have grow to be pessimistic.
There is currently no sign that institutional investors have given up on expectations that Bitcoin will reach $100,000 within the near future. Correlation and volatility metrics suggest that Bitcoin's price behavior has not modified significantly after the 30% decline, meaning a number of days of ETF net outflows mustn’t be overstated. The impact of the US Federal Reserve's recent liquidity injection has not yet been reflected within the markets, so it’s premature to guage Bitcoin's performance.
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