Bitcoin is caught between fragile stability and growing bearish conviction, as prediction markets increasingly bet on a sharp decline even while prices
attempt to steady after weeks of violent swings. The world’s largest cryptocurrency has fallen about 40% from its October peak of over $126,000, sliding to its lowest levels since President Donald Trump took office. While Bitcoin has recently stabilized above $70,000, sentiment across markets suggests traders remain deeply unconvinced that the worst is over. On decentralized prediction platform Polymarket, traders are overwhelmingly positioning for further downside. Contracts now imply an 82% probability that Bitcoin will fall to $65,000 in 2026, while the odds of a drop below $55,000 have risen to nearly 60%. Short-dated bets are even more pessimistic, with one February contract assigning a 72% chance that Bitcoin trades below $70,000 by March 1. Roughly $1.7 million has been wagered on that outcome alone, underscoring the scale of bearish sentiment. “Bitcoin has lost momentum, narrative and its claim as a hedge all at once,” said Ilan Solot of Marex, noting that the asset’s failure to behave as a safe haven during periods of geopolitical and macroeconomic stress has shaken investor confidence. That loss of confidence dates back to early October, when a sudden weekend crash triggered billions of dollars in liquidations. Since then, the broader crypto market has struggled to recover. Total crypto market capitalization has fallen to around $2.5 trillion, down from more than $4 trillion just months ago. Dan Morehead, founder of Pantera Capital, said the damage inflicted during the October selloff may have longer-lasting consequences. Leveraged investors were hit particularly hard, and many may not return to the market anytime soon, he warned, slowing any sustained recovery. Institutional support, once a key pillar of the rally, has also weakened. After drawing tens of billions of dollars into spot Bitcoin funds last year, US-listed crypto exchange-traded funds have seen nearly $4 billion in net outflows over the past three months. Research from Glassnode and K33 suggests the average ETF buyer is now sitting on losses. “This downshift in ETF flows reflects a lack of fresh demand,” said Citi analyst Alex Saunders, adding that long-term holders have also grown uneasy about cyclical weakness in Bitcoin. Yet despite the gloom reflected in prediction markets, Bitcoin has shown tentative signs of resilience. After plunging to nearly $60,000 last Thursday, its lowest level since October 2024, the cryptocurrency rebounded sharply and was trading around $70,500 in London on Monday. That rebound came amid extreme volatility. The Bitcoin Volmex Implied Volatility Index briefly surged above 97%, marking its largest intraday spike since the collapse of FTX in 2022. Traders say such turbulence has flushed out speculative excess, leaving the market on somewhat firmer footing. “Crypto markets have stabilized, but uncertainty remains about whether the worst is behind us,” said Caroline Mauron, co-founder of Orbit Markets. She identified $60,000 as key support, while a sustained move above $75,000 could signal the end of the current bear phase. There are also early signs of dip-buying. US Bitcoin ETFs recorded $221 million in inflows on February 6, suggesting some investors are cautiously re-entering after the selloff. “The mood is guardedly constructive,” said Sean McNulty of FalconX, arguing that recent turbulence has purged speculative froth and left Bitcoin trading on stronger fundamentals. Technical analysts point to the 200-week moving average near $58,000 as a critical long-term support level. As long as Bitcoin remains above it, there is scope for a rebound toward $73,000–$75,000, with a break higher potentially opening the door to $81,000, according to IG Australia’s Tony Sycamore. Still, a sharp divide remains between market participants. While prediction traders overwhelmingly expect further downside, some Wall Street bulls continue to argue that Bitcoin could eventually reclaim — or even surpass — its former highs. For now, however, the balance of evidence suggests a market struggling to regain conviction, caught between fragile rebounds and persistent fears of deeper losses ahead.
