Key takeaways:
Bitcoin ETF outflows and a 31% decline from its peak have sparked concerns, yet indicators suggest institutional investors are still committed to Bitcoin.
The evolving correlation of Bitcoin with gold and its consistent volatility imply that price movements are stable, despite short-term market challenges.
Bitcoin (BTC) experienced a 3% increase on Tuesday after dipping to the $85,000 mark on Monday. A rise in outflows from spot Bitcoin exchange-traded funds indicates a potential decline in institutional investor demand since the drop on October 10. This diminishes the chances of Bitcoin surpassing $100,000 before the year’s end.
On Monday, the spot Bitcoin ETFs witnessed $358 million in net outflows, marking the most significant daily withdrawal in over three weeks. This development has led to speculation that institutional investors may be lessening their positions following the breach of the critical $90,000 support level.
Currently, Bitcoin is trading 31% below its all-time high of $126,219, a retracement that might indicate the conclusion of the bullish trend that lasted into October.
According to the X user ‘forcethehabit’, the recent drop in Bitcoin does not indicate a shift in trend, as interest rate cuts have been postponed and the US Federal Reserve (Fed) has been reducing its balance sheet for longer than anticipated. The analysis highlights that institutional capital has mostly flowed in through ETFs and corporate reserves, with a transition to riskier and less liquid assets still pending.
Bitcoin shows varying correlation with gold
Bitcoin’s correlation with gold prices can help determine whether the cryptocurrency is regarded as an alternative store of value or simply a representation of higher-risk assets. The narrative of digital gold has been a significant factor driving Bitcoin’s growth throughout 2025.
Evaluating how Bitcoin tracks weekly price movements of gold is more crucial than its 48% underperformance relative to gold since July. The 60-day correlation metric has swung between positive and negative since May, suggesting inconsistent alignment between Bitcoin and gold price trends. Nonetheless, traders are clearly disheartened by the rejection that followed the loss of the $110,000 threshold.
While this information may initially seem bearish, the 31% decline in Bitcoin’s price since October has not affected the correlation metric. This undermines the notion that institutional investors have fundamentally altered their risk assessments. Bitcoin still has the potential to operate as an independent and decentralized financial system, even as gold maintains its status as the world’s largest store of value, with an estimated market capitalization of $30 trillion.
It also seems hasty to conclude that institutional money has forsaken Bitcoin based solely on a 10-week correction, especially given that Bitcoin has outperformed the S&P 500 index by 7% over the past 18 months. Although this difference may seem slight, Bitcoin’s options risk profile closely mirrors that of Nvidia (NVDA US) and Broadcom (AVGO US), two of the top eight companies globally by market value.
In November, Bitcoin options’ implied volatility reached 53%, which is comparable to the current level for Tesla (TSLA US). When traders expect significant price fluctuations, this metric increases to reflect the higher premiums on call (buy) and put (sell) options. Market makers typically reduce risk exposure when unexpected price movements are likely; however, this does not automatically infer a bearish sentiment from investors.
As of now, there is no indication that institutional investors have abandoned the hope of Bitcoin hitting $100,000 in the near future. Correlation and volatility indicators suggest that Bitcoin’s price behavior has not significantly changed following the 30% dip, meaning that a few days of ETF net outflows should not be overstated. The repercussions of the recent liquidity boost from the US Fed have yet to permeate the markets, rendering it premature to evaluate Bitcoin’s performance.
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