Key takeaways:
Despite Bitcoin ETF outflows and a 31% pullback from its peak, indicators suggest that institutional investors are still committed to Bitcoin.
Bitcoin’s changing correlation with gold and consistent volatility indicate that its price dynamics are stable despite recent market fluctuations.
Bitcoin (BTC) rose 3% on Tuesday after dipping to around $85,000 on Monday. Increased outflows from spot Bitcoin exchange-traded funds appear to signal a decrease in institutional investor demand since the crash on October 10, making it less likely for Bitcoin to surpass $100,000 by the end of the year.
The spot Bitcoin ETFs experienced $358 million in net withdrawals on Monday, the highest daily outflow in more than three weeks. This has led to speculation that institutional investors might be scaling back following the breach of the psychological support level at $90,000.
Crucially, Bitcoin is now trading 31% below its all-time high of $126,219, a retracement that may indicate the conclusion of the bullish trend that lasted into October.
As per X user ‘forcethehabit’, Bitcoin’s decline does not indicate a trend reversal, given the delay in interest rate cuts and the prolonged reduction of the US Federal Reserve’s (Fed) balance sheet. The analysis highlights that institutional investments mainly came through ETFs and corporate reserves, while a shift to riskier and less liquid assets is yet to happen.
Bitcoin shows inconsistent correlation relative to gold
Bitcoin’s relationship with gold prices can help determine whether the cryptocurrency is viewed as an alternative store of value or merely a higher-risk asset. The narrative of digital gold has been pivotal in driving Bitcoin’s growth throughout 2025.
How Bitcoin aligns with weekly shifts in gold pricing is more significant than its 48% underperformance against gold since July. The 60-day correlation has shown fluctuations between positive and negative since May, revealing an inconsistency in the price trends of Bitcoin and gold. Nevertheless, it’s clear that traders are disheartened by the rejection after losing the $110,000 level.
While such figures may seem bearish at first glance, the 31% drop in Bitcoin’s price since October hasn’t affected the correlation metric, challenging the notion that institutional investors have altered their risk appetite. Bitcoin may still thrive as an independent and decentralized financial system, while gold retains its status as the foremost store of value, boasting an estimated market cap of $30 trillion.
It may be premature to assert that institutional capital has forsaken Bitcoin, based solely on a 10-week decline. Bitcoin has actually surpassed the S&P 500 index by 7% in the last 18 months. Even though this difference may seem minimal, Bitcoin’s options risk profile closely resembles that of Nvidia (NVDA US) and Broadcom (AVGO US), which rank among the top eight global companies by market value.
Bitcoin options’ implied volatility spiked at 53% in November, aligning with current levels for Tesla (TSLA US). As traders anticipate significant price fluctuations, this metric rises in reaction to the elevated premiums for call (buy) and put (sell) options. Market makers typically adjust their risk exposure when unexpected price movements become likely; however, this doesn’t necessarily imply a bearish sentiment from investors.
There’s currently no evidence that institutional investors have discarded expectations for Bitcoin to achieve $100,000 shortly. Correlation and volatility metrics imply that Bitcoin’s price dynamics haven’t considerably altered following the 30% decline, suggesting that a few days of ETF net outflows should not be overstated. The impact of the recent liquidity infusion from the US Fed has yet to be visible in the markets, making it hasty to evaluate Bitcoin’s performance.
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