Traders Expect Bitcoin Sell-Off to Continue

Prediction market traders are increasingly betting that Bitcoin’s correction is far from over, even after the cryptocurrency dropped to around $65,000 this week amid growing pressure from ETF outflows and weakening institutional demand.

On Kalshi, traders currently assign a 66% probability that Bitcoin will fall below $55,000 this year, while the probability of a decline below $50,000 stands at 50%. They also see a 31% chance that prices could fall below $40,000.

Source: Kalshi.

Traders on Polymarket share a similar view. Contracts on the platform imply roughly a 67% probability of Bitcoin falling below $55,000 this year and better-than-even odds of dropping below $50,000.

On Polymarket, traders now assign only a 30% probability that Bitcoin will outperform gold in 2026. Gold has declined about 1.5% over the past month but remains up 33% year-over-year, while BTC has fallen approximately 37% over the same period.

This comes amid declining institutional interest in the leading cryptocurrency. According to SoSoValue, investors withdrew $2.4 billion from U.S. Bitcoin ETFs in May and another $1 billion during the first two trading days of June, extending a record streak of outflows.

Meanwhile, analysts at K33 Research argue that Bitcoin is also losing the battle for investor attention to artificial intelligence-related stocks. In a report released Tuesday, the firm said many investors view the opportunity cost of holding BTC as too high while AI-related companies continue to post outsized gains and major stock indices approach record highs.

“A significant portion of the market views the opportunity cost of holding BTC as too high while anything related to AI continues to surge,” wrote K33 analyst Vetle Lunde.

Although K33 still considers Bitcoin undervalued relative to equities over the long term, prediction markets suggest traders are increasingly preparing for further downside before any meaningful recovery begins.

At the same time, capital does not appear to be leaving the crypto ecosystem entirely. Instead, it is increasingly flowing into digital dollars.

Stablecoins such as Tether (USDT) and USD Coin (USDC) increased their market share during Bitcoin’s drop to $66,000. This suggests that traders are moving funds into defensive positions and waiting for better opportunities rather than immediately buying the dip.