Market News

(Bloomberg) -- Bitcoin’s Wall Street embrace was supposed to bring stability. Instead, it created a new vulnerability: dependence on American money that is now in retreat.

Since Oct. 10, roughly $8.5 billion has flowed out of US-listed spot Bitcoin exchange-traded funds. Futures exposure on the Chicago Mercantile Exchange has fallen by about two-thirds from its late-2024 peak to roughly $8 billion. Prices on Coinbase, the venue favored by many American institutions, have persistently traded at a discount to offshore exchange Binance — a signal of sustained US selling. Bitcoin has fallen more than 40% even as stocks and precious metals have found buyers.

That reversal carries unusual weight because of how the market changed. For most of its history, Bitcoin’s price was set on offshore exchanges by retail traders. Over the past two years, spot ETFs funneled billions through US vehicles, the CME became the dominant futures venue, and pension funds and hedge funds displaced individual buyers. American retail and institutional capital became the marginal price-setter.

When that capital was expanding, Bitcoin surged to a record on Oct. 6. Now it’s stalling — and there is no obvious catalyst to restart it. The original cryptocurrency was little changed at around $67,500 on Wednesday.

The core problem is simple: the institutional thesis broke. Investors who bought Bitcoin as a hedge against inflation, currency debasement, or equity market stress have watched it fall alongside — and sometimes faster than — the risks it was supposed to offset. Those who treated it as a momentum trade have rotated into assets that are actually moving from global stocks to gold.