Key takeaways:
Bitcoin ETF outflows and a 31% drawdown from the peak have raised doubts, but metrics indicate that institutional investors are not abandoning Bitcoin.
Bitcoin’s shifting correlation with gold and steady volatility suggest price behavior remains intact despite the short-term market pressure.
Bitcoin (BTC) gained 3% on Tuesday after selling off to the $85,000 level on Monday. An uptick in outflows from the spot Bitcoin exchange-traded funds appears to show institutional investor demand softening since the Oct. 10 crash. This reduces the likelihood of Bitcoin trading above $100,000 by year-end.
The spot Bitcoin ETFs recorded $358 million in net outflows on Monday, marking the largest daily withdrawal in over three weeks. The move fueled speculation that institutional investors might be reducing their exposure after the psychological $90,000 support level was breached.
More importantly, Bitcoin is currently trading 31% below its all-time high of $126,219, a pullback that could signal the end of the bullish phase that extended into October.
According to X user ‘forcethehabit’, Bitcoin’s decline does not represent a trend change, as interest rate cuts have been delayed and the US Federal Reserve (Fed) has reduced its balance sheet for longer than expected. The analysis also notes that institutional capital entered primarily through ETFs and corporate reserves, while rotation into riskier and more illiquid assets has yet to materialize.
Bitcoin shows inconsistent correlation relative to gold
Bitcoin’s correlation with gold prices can be used to assess whether the cryptocurrency is viewed as an alternative store of value or simply a proxy for higher-risk assets. The digital gold narrative has been an important driver of Bitcoin’s upside throughout 2025.
How Bitcoin tracks weekly moves in the gold price is more important than its 48% underperformance relative to gold since July. The 60-day correlation metric has oscillated between positive and negative since May, indicating little consistency between Bitcoin and gold price trends. Still, there is no doubt that Bitcoin traders are disappointed by the rejection that followed the loss of the $110,000 level.
While such data may appear bearish at first glance, the 31% Bitcoin price drop since October had no impact on the correlation metric. This weakens the argument that institutional investors have shifted their risk perception. Bitcoin may still succeed as an independent and decentralized financial system, even as gold remains the world’s largest store of value, with an estimated $30 trillion market capitalization.
It also seems premature to conclude that institutional money has abandoned Bitcoin based solely on a 10-week correction, especially since Bitcoin has outperformed the S&P 500 index by 7% over the past 18 months. Although that difference may appear modest, Bitcoin’s options risk profile closely matches Nvidia (NVDA US) and Broadcom (AVGO US), two of the world’s eight largest companies by market value.
Bitcoin options’ implied volatility peaked at 53% in November, roughly in line with the current level for Tesla (TSLA US). When traders anticipate sharp price swings, this metric rises to reflect the higher premiums charged on call (buy) and put (sell) options. Market makers tend to reduce risk exposure when surprise price moves are more likely; however, this does not necessarily mean investors have turned bearish.
There is currently no indication that institutional investors have abandoned expectations for Bitcoin to reach $100,000 in the near term. Correlation and volatility metrics suggest that Bitcoin’s price behavior has not materially changed following the 30% decline, meaning a few days of ETF net outflows should not be overemphasized. The effects of the recent liquidity injection from the US Fed have yet to be reflected in markets, making it premature to judge Bitcoin’s performance.
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