ETF outflows and AI competition drive bearish positioning on Kalshi and Polymarket
Traders on prediction market platforms Kalshi and Polymarket are assigning substantial odds to bitcoin falling below $55,000 before the end of 2026, with meaningful probabilities of even steeper declines amid heavy institutional outflows and investor rotation into artificial intelligence stocks.
On Kalshi, 66% of traders forecast bitcoin will drop below $55,000 this year. Half expect sub-$50,000 prices, and 31% see a realistic chance prices dip below $40,000. Polymarket reflects similar bearishness, with 67% of traders betting bitcoin falls below $55,000 by year-end. By contrast, only 30% of Polymarket traders believe bitcoin will outperform gold in 2026.
Bitcoin has tumbled toward $65,000 to $66,000 as U.S.-listed bitcoin ETFs hemorrhage capital. In May 2026 alone, $2.4 billion flowed out of these funds. The outflows accelerated in early June, with $1 billion withdrawn in the first two trading days of the month, according to data tracked by SoSo Value.
Institutional investors are not fleeing crypto entirely. Instead, capital is rotating into stablecoins USDT and USDC rather than exiting the sector. Both have gained market share during bitcoin’s recent slide, signaling traders are raising cash and positioning for better entry points rather than abandoning digital assets outright.
The shift reflects a broader competition for investor attention. “Much of the market views the opportunity cost of holding BTC as too high while anything AI-related soars,” said Vetle Lunde, an analyst at K33 Research. Investors are favoring high-flying AI stocks over bitcoin, creating headwinds for price recovery.
This positioning contrasts sharply with longer-term sentiment. K33 Research argues bitcoin remains undervalued relative to equities over extended time horizons, even as near-term prediction markets price in further downside. The divergence reflects traders’ focus on tactical opportunities and near-term capital flows rather than fundamental valuations.
Bitcoin’s year-to-date performance underscores the pressure. The asset is down 37% over the last year, while gold has gained 33% in the same period. Gold has fallen only 1.5% over the last month, outpacing bitcoin’s recent weakness.
The prediction market positioning suggests institutional and retail traders expect bitcoin to test lower levels before any sustained recovery takes hold. Whether those forecasts materialize will depend on the pace of ETF redemptions and the degree to which capital flowing into stablecoins eventually cycles back into bitcoin or remains parked in AI-related assets.
