Prediction traders bet Bitcoin may fall below $65K amid deepening sell-off

Contracts on Polymarket, a decentralized prediction platform, now imply an 82% chance that Bitcoin will fall to $65,000 this year, a level roughly 13% lower than today's $73,200

By Vildana Hajric

 

Bitcoin values have fallen to their lowest level since President Donald Trump took office. If prediction markets are to be believed, the world’s most popular cryptocurrency may have a lot further to fall. 

Bitcoin has lost 40 per cent since it hit an all-time high of over $126,000 in October, shedding momentum, narrative and its claim as a hedge all at once.

 

Contracts on Polymarket, a decentralized prediction platform popular with crypto-native speculators, now imply an 82 per cent chance that Bitcoin will fall to $65,000 this year, a level roughly 13 per cent lower than today’s $73,200. 

 

Some are betting on even worse. The odds of a sub-$55,000 finish have climbed to roughly 60 per cent, while the odds of a rebound sending the currency back up to $100,000 have fallen to 54 per cent from 80 per cent at the start of the year. 

 

The bearish tilt is even sharper on short-dated contracts. One February market on Polymarket now assigns a 72 per cent chance that Bitcoin trades below $70,000 by March 1 — up more than 35 per cent from the start of the month. About $1.7 million in bets backs that outcome, reflecting real-time trader pessimism just as ETF outflows and failed macro correlations deepen doubt across the space.

 

“It basically reflects the bearish sentiment in markets right now,” said Marex’s Ilan Solot, citing Bitcoin’s recent inability to act as a safe haven, among other factors. 

 

Crypto-market sentiment has been in the gutter since early October, when a surprise weekend crash liquidated billions of dollars in various positions. In hindsight, it proved a significant moment: tokens have not been able to recover since. A fresh selloff this past weekend has darkened the mood further. The value of the crypto market now stands at around $2.5 trillion, down from more than $4 trillion in October. 

 

“These down markets are often very brutal on the people that take leverage. And the amount of money that was destroyed on October 10th is way bigger than the previous downdraft in November of 2022,” said Dan Morehead, founder of Pantera Capital. “That causes a lot of pain. And a lot of those investors don’t return to the market — and it takes a while.” 

Flows into crypto ETFs had helped buoy prices last year when tens of billions of dollars flowed into Bitcoin funds alone. But that source of support has dried up: as a category, crypto ETFs trading in the US have seen outflows of nearly $4 billion over the past three months, data compiled by Bloomberg show. The average trader is now underwater on their investment, according to research from Glassnode and K33. 

 

“We have seen a notable downshift in the flows to US spot ETFs, which is a large source of potential new money into the space,” wrote Citi’s Alex Saunders in a report. “This lack of new demand coincided with established long-time holders becoming concerned about cyclical weakness in Bitcoin”

 

Yet the wisdom of the crowd — when viewed through the prediction-markets lens — stands in hard contrast to what Wall Street crypto bulls have been hyping: that digital tokens are set to make a comeback. Money manager and fintech personality Tom Lee, for instance, in November predicted that Bitcoin could be back between $150,000 and $200,000, a forecast that failed to materialize. And while firms like Standard Chartered Plc and Bernstein have slashed their forecasts, they still expect a meaningful rally: both say Bitcoin could reach $150,000 by the end of the year.