Institutional Exodus Weighs on Bitcoin’s Recovery

Bitcoin CRYPTO000BTC

Bitcoin is grappling with significant headwinds as it attempts to stabilize near the $87,240 level, a price point nearly 28% below its record peak from October. A primary factor impeding its rebound is a substantial and accelerated withdrawal by institutional investors, a pace that has caught seasoned market participants off guard.

Notable developments are occurring at the institutional level despite the prevailing market weakness. According to reports from Bloomberg and Reuters, banking giant JPMorgan Chase is seriously evaluating the launch of cryptocurrency trading services for its institutional clientele. These services would encompass spot trading and derivatives. The plans are in preliminary stages and are contingent upon client demand and regulatory assessments.

Should JPMorgan proceed, it would follow competitors like Morgan Stanley, which has announced plans to offer crypto trading via E*Trade by mid-2026. Such a move by a Wall Street titan would signal that Bitcoin continues to be regarded as a legitimate asset class, even amidst current price volatility.

ETF Outflows Hit Record Levels

The data reveals a stark picture of institutional retreat. Digital asset investment products witnessed net outflows totaling $952 million in the week ending December 23, as reported by CoinShares. Bitcoin-specific exchange-traded funds (ETFs) were particularly hard hit, with $460 million exiting these products. A single day, December 22, accounted for $142.2 million of that total.

While major funds from Fidelity, Bitwise, and Ark Invest faced redemptions, BlackRock's IBIT fund stood as an exception, recording modest inflows of $6 million. The shift in mood is pronounced; for context, mid-December saw days with inflows exceeding $450 million.

Derivatives Market Sees a Reset

The derivatives landscape has undergone a pronounced clearing. Since the October high, approximately $19 billion in open interest has been wiped from the market, returning to levels last observed in 2023. This liquidation has largely purged speculative excess from the system.

Concurrently, on-chain data indicates a redistribution among holder cohorts. Medium-term investors, typically holding assets for three to five years, have reduced their positions by roughly 32% in 2025. In contrast, long-term major holders continue to accumulate, adding 278,000 BTC to their reserves since 2023.

Critical Support at $87,000

The immediate technical focus for Bitcoin is the psychologically significant $87,000 support zone. A sustained break below this level could trigger further downward momentum. The Relative Strength Index (RSI) sits at 38.1, suggesting oversold conditions, yet immediate buying pressure remains subdued. The total market capitalization for all cryptocurrencies has dipped below $3 trillion to approximately $2.97 trillion. Market participants are now watching to see if the year-end period brings stabilization or if Bitcoin will enter the new year after one of its weakest fourth-quarter performances since 2018.