Bitcoin drops to the $88,500 mark, institutional funding faces a major turning point

In just one week, Bitcoin quickly fell from a high near $98,000 to around $88,500, a significant decline. The context of this sharp turn is quite complex: despite the hot rise in the precious metals market (silver exceeded $100 per ounce for the first time and gold approached $5,000), the cryptocurrency market is in trouble, and institutional funds are facing a critical moment of reallocation.

Precious metals soaring and the differentiation of the crypto market

At present, global asset allocation is clearly differentiated. The precious metals market is extremely hot: silver prices stand above the $100 per ounce mark for the first time, gold prices approach $5,000, and platinum soars 5% to a record high. Even copper, which is not normally classified as a precious metal, is expected to join the ranks of precious metals under the current rally, with prices rising 2.5% and approaching record highs.

In stark contrast is the weak performance of the cryptocurrency market. Bitcoin opened down again during the US trading session, with the price falling back to the $88,500 line, showing a clear shift in investor sentiment. Behind this differentiation is a reassessment of the market’s risk appetite for different assets.

Spot Bitcoin ETFs continue to have large outflows, and the capital side has weakened

The most intuitive signals come from the flow of funds. U.S. spot Bitcoin ETFs have experienced significant outflows over the past four trading days, exceeding $1.6 billion. This data shows that the incremental funds that poured in at the beginning of the year are gradually returning.

Jasper De Maere, a strategist at crypto trading firm Wintermute, pointed out a key phenomenon: the recent noticeable rise in stablecoin swaps for fiat currencies. This trend almost certainly reflects that institutional investors who re-entered the market at the beginning of the year have begun to gradually reduce their positions or even exit. Compared with the bullish enthusiasm at the beginning of the year, institutions are currently facing a more cautious market environment.

Crypto-related stocks are under pressure across the board

The impact of the decline in institutional confidence quickly spread to crypto ecosystem-related stocks. Coinbase (COIN) fell 2.6%, MicroStrategy (MSTR) fell 1.2%, and Bitcoin miners Riot Platforms (RIOT) and MARA Holdings (MARA) both recorded 2% declines. The listed companies in the entire crypto industry chain have not been spared.

During the same period, the overall performance of the US stock market was mixed. The Nasdaq rose 0.4%, but Intel (INTC) plummeted 15% after its fourth-quarter earnings report as it disappointed the market with first-quarter guidance — while fourth-quarter earnings exceeded expectations, AI chip supply constraints were worrying. The stock is still up 17% year-to-date.

The popularity of the US trading market has declined, and the annual return has plummeted

Even more telling is the shift in performance during the US trading session. When Bitcoin hit a high of $98,000 last week, the cumulative return this year during the US trading session was as high as 9%, which seems promising. But just a few days later, this return has plummeted to just 2%, a drop of more than 77%.

CoinDesk senior analyst James Van Straten’s observations point out that US investors’ demand for Bitcoin is significantly weakening. This phenomenon coincides perfectly with the huge outflow of funds from spot Bitcoin ETFs - when funds begin to withdraw, the market heat is bound to decline.

Gold sprints to $5,000, intensifying the divergence between crypto and traditional assets

Looking at the asset market as a whole, the divergence between traditional safe-haven assets and cryptocurrencies is a foregone conclusion. The price of gold approached $5,000 and silver hit a record high, which usually reflects a renewed awareness of macroeconomic protection and risk. Meanwhile, Bitcoin’s performance from around $88,500 is undergoing a shift from optimism at the beginning of the year to caution in the present.

The change in institutional investors’ behavior is most indicative – the surge in stablecoins for fiat currencies is not a coincidence, but a strategic adjustment of funds. When large amounts of money begin to quietly leave the market, the market often enters the process of finding a new balance point. Whether Bitcoin can return to an upward trajectory in the future depends on whether it can form a new market consensus and fundamental support.