Prediction market traders bet bitcoin's selloff has further to run

By Sam Reynolds | Edited by Omkar Godbole

What to know:

• Prediction market traders see a strong chance bitcoin falls below $55,000 this year, with meaningful odds it could drop under $40,000.
• Heavy outflows from U.S. bitcoin ETFs and investors' growing preference for high-flying AI stocks are pressuring bitcoin, which has slumped toward $65,000.
• While traders are increasingly bearish on bitcoin's near-term performance versus assets like gold, money is shifting into stablecoins such as USDT and USDC rather than leaving crypto entirely.

Prediction market traders are increasingly wagering that bitcoin's correction is far from over, even after the cryptocurrency tumbled toward $65,000 this week amid mounting pressure from ETF outflows and weakening institutional demand.

On Kalshi, traders currently assign a 66% probability that bitcoin drops below $55,000 this year and a 50% probability of sub-$50,000 prices. They also give a 31% chance that prices could even dip below $40,000.

Polymarket traders are expressing a similar view. Contracts on the platform imply a roughly 67% chance bitcoin falls below $55,000 this year and a better-than-even chance it drops under $50,000. On Polymarket, traders now give bitcoin only a 30% chance of outperforming gold in 2026. Gold is down approximately 1.5% in the last month but is up 33% in the last year, while BTC is down around 37%.

This comes amid dwindling institutional appetite for the leading cryptocurrency. According to data from SoSo Value, investors withdrew $2.4 billion from U.S.-listed BTC ETFs in May and $1 billion in the first two trading days of June, with the record-breaking outflow continuing.

Meanwhile, K33 Research argues that bitcoin is also losing a battle for investor attention against artificial intelligence-related stocks. The firm said in a Tuesday report that many investors view the opportunity cost of holding bitcoin as too high while AI-linked companies continue to post outsized gains and major equity indexes push to record highs.

"Much of the market views the opportunity cost of holding BTC as too high while anything AI-related soars," K33's Vetle Lunde wrote.

While K33 still views bitcoin as undervalued relative to equities over the long term, prediction markets suggest traders are increasingly positioning for lower prices before any recovery arrives.

While traders increasingly bet on lower bitcoin prices, capital does not appear to be leaving crypto entirely. Instead, it is moving into digital dollars. USDT and USDC have both gained market share during bitcoin's slide to $66,000 — the crypto equivalent of parking in the lobby while waiting for the roller coaster to stop.