The weekend sell-off briefly pushed Bitcoin's price below the psychological threshold of $75,000, seemingly turning market sentiment on its head overnight. On the prediction platform Polymarket, a notable betting market is heating up: the probability of Bitcoin falling below $65,000 by 2026 has surged to 72%, attracting nearly a million dollars in bets. This is more than just a numbers game; it acts like a mirror, reflecting the undercurrents swirling in the depths of the current crypto market—the rapid shift from the post-Trump victory euphoria to the widespread anxiety over a potential "deep squat" is startling.
What's more alarming for some veteran players is that this decline has put MicroStrategy, the publicly traded company holding the most Bitcoin globally, to the test for the first time since late 2023, as its average holding cost is being breached. It's like the frontrunner in an endurance race suddenly finding the track beneath their feet becoming slippery.
Why Did Market Sentiment Deteriorate So Rapidly?
On the surface, this appears to be a price correction. But upon closer inspection, you'll find several forces intertwining, collectively pulling the market down.
First, there's the technical "breakdown" signal. According to observations from some on-chain analysis firms, since Bitcoin fell below its 365-day moving average in November 2025, it has effectively entered a cycle they define as a "bear market." This long-term moving average is often seen as the "bull-bear dividing line"; once breached, it typically triggers systematic selling by technically-oriented investors. I recall in the 2018 bear market, after a similar breach of a long-cycle moving average, the market experienced months of gradual decline and bottom consolidation, where buying too early was akin to "catching a falling knife."
Second, the macro liquidity "faucet" seems to be tightening. Some macro analysts point out that the current pullback stems more from a broad tightening of financial liquidity in the U.S. rather than any fatal issue specific to cryptocurrency. Changes in the Federal Reserve's balance sheet, the draining effect of Treasury issuance—these seemingly distant macro factors are actually being transmitted precisely to Bitcoin's price through the pricing logic of risk assets. When the tide (liquidity) recedes, the assets with the highest volatility are often the first to be exposed.
Finally, an interesting perspective comes from within the industry. Mati Greenspan, CEO of Quantum Economics, reminds us that perhaps we've been focusing on the wrong thing all along. He wrote on social media that Bitcoin's core design goal was to become a currency independent of the traditional banking system; price appreciation is merely a possible "side effect," not the reason for its existence. This perspective is like a cold splash of water, making us ponder: when the market only focuses on price fluctuations, has it strayed from its original vision?
Is the Prediction Market's "Crystal Ball" Accurate?
The high probability bets on Polymarket undoubtedly amplify the market's pessimistic expectations. Besides the drop below $65,000, the probability of Bitcoin falling to $55,000 has also reached 61%. Meanwhile, there is still a 54% probability bet that it can rebound to the $100,000 mark by year-end. This standoff between bulls and bears precisely illustrates the market's significant divergence.
But here's a key question: does the "probability" in a prediction market equal future "fact"? Not necessarily. It primarily reflects the collective sentiment of current market participants, voted on with real money. This sentiment is highly contagious and can be self-fulfilling, but it can also reverse instantly due to a sudden positive development. Just like during the March 2020 crash, no one could predict the epic bull market that followed. Prediction markets are an excellent window for observing sentiment, but they are by no means a navigation chart for investment.
Furthermore, Polymarket itself is facing some regulatory challenges, such as restrictions due to licensing issues in states like Nevada. This reminds us that this "sentiment barometer" itself exists in a dynamically changing environment.
Conflicting Institutional Views: Who Should Retail Investors Listen To?
Faced with market confusion, the views of large institutions are also showing interesting contradictions.
On one hand, bearish sentiment permeates the prediction markets and some analysts. On the other hand, just a few months ago, several top institutions issued quite optimistic forecasts. For example, Grayscale Investments predicted that Bitcoin could break through its previous all-time high of $126,000 in the first half of 2026, citing continued institutional adoption and gradually clearer regulatory environment. Analysts from Standard Chartered and Bernstein had also given target prices of $150,000 for 2026, although they later lowered their expectations due to slowing ETF inflows.
Such contradictions are not uncommon. The long-term logic of institutions (such as Bitcoin's scarcity, digital gold narrative) and short-term market fluctuations (liquidity, sentiment, technicals) are often two different languages. For investors, the key is to distinguish which voice you are hearing. Is it a trend judgment spanning several years, or a warning about risks in the next few quarters?
What Can Investors Focus on Now?
There is a lot of market noise. I believe one can focus on a few more substantive points to watch, rather than being led by the nose by mere probability of price movements.
- MicroStrategy's "Cost Line" Defense: As the market's "banner," the relationship between its stock price and its average holding cost is worth watching. If Bitcoin remains below its average cost, will it shake its long-term holding strategy or affect the attitude of other listed companies to follow suit? This is an important bellwether.
- Real Data on Macro Liquidity: Instead of guessing, focus on real data like the Fed's balance sheet and the U.S. Treasury General Account (TGA) balance. These are the "prime movers" driving all risk assets, including cryptocurrencies.
- The "Quality" and "Quantity" of On-Chain Activity: During price declines, are long-term holders panic selling or calmly accumulating? On-chain data can tell us whether筹码 (chips/tokens) are dispersing or concentrating. For example, checking metrics like changes in the supply held by long-term holders and exchange inflow/outflow volumes often has more forward-looking value than looking at price charts.
- Whether Your Own Investment Thesis Still Holds: This is the most important point. What was your reason for investing in Bitcoin initially? Was it a belief in its long-term potential as a store of value, or merely for short-term speculation? If the long-term logic remains unchanged (e.g., global money printing, sovereign credit risk), then market volatility is instead a moment to test your conviction and provide better entry opportunities. If it was just following the hype, then any slight movement is enough to cause sleepless nights.
The market always swings between excessive optimism and excessive pessimism. When 72% of people on Polymarket are betting on a decline, it might be precisely the time when we need to maintain a bit of calm and think contrarily. After all, in the crypto world, consensus is often expensive, and real opportunities are often born where consensus breaks. Of course, any judgment must be combined with your own situation; the market always has uncertainty. Proper position management and risk control are essential lessons for navigating any cycle.
