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Prediction markets are flashing warning signs for Bitcoin as traders increasingly position for further downside in 2026. Following a weekend sell-off that briefly pushed Bitcoin prices below $75,000, sentiment on Polymarket has turned sharply bearish, with odds climbing to 72% that BTC will fall below $65,000 next year.
The shift highlights growing uncertainty across crypto markets, driven by technical weakness, tightening US liquidity, and fading post-election optimism that once fueled Bitcoin’s rally.
Polymarket Signals Rising Risk
On Monday, Polymarket data showed the probability of Bitcoin dropping below $65,000 in 2026 rising to 72%, backed by nearly $1 million in trading volume. The spike reflects growing conviction among traders that the market has not yet found a durable bottom.
Other popular wagers point to heightened volatility ahead. Bets on Bitcoin falling below $55,000 carried implied odds of 61%, while expectations for BTC reclaiming $100,000 by year-end stood at 54%. Together, these positions suggest traders are split between sharp downside risk and the potential for a late-cycle recovery.
Prediction markets often act as real-time sentiment gauges, and the surge in bearish bets marks a notable reversal from optimism seen after President Donald Trump’s November 2024 election victory.
Post-Election Gains Erased
Bitcoin’s recent decline has effectively wiped out gains accumulated during the post-election rally, when expectations of crypto-friendly regulation and institutional inflows drove prices higher. As macro conditions tightened, that optimism faded, leaving BTC vulnerable to renewed selling pressure.
The sell-off also marked a symbolic moment for Michael Saylor’s Strategy, the world’s largest publicly listed Bitcoin holder. Bitcoin prices slipped below the firm’s average purchase cost for the first time since late 2023, highlighting how deep the pullback has become.
Bear Market Signals Persist
Several analysts argue the downturn is part of a broader bearish trend rather than a short-term correction. CryptoQuant reiterated that Bitcoin has been in a bear market since November 2025, when prices fell below the 365-day moving average.
“Don’t try to find bottoms after a new leg down,” CryptoQuant head of research Julio Moreno warned in a recent post, noting that bear market bottoms typically take months to form. The analysis suggests traders may be underestimating the time required for sentiment and price structure to stabilize.
Technical indicators continue to show weakening momentum, reinforcing the cautious stance reflected in prediction market bets.
Liquidity Conditions Weigh
Macro factors may be playing an equally important role. Raoul Pal, founder of Global Macro Investor, attributed the sell-off to tight US liquidity conditions rather than crypto-specific issues. Reduced liquidity has historically pressured risk assets, including Bitcoin, as capital becomes more selective.
Quantum Economics CEO Mati Greenspan offered a philosophical perspective, arguing that Bitcoin was not designed primarily as a price-appreciating asset. Instead, he emphasized its role as an independent monetary system outside government and banking control, suggesting that price volatility is a secondary effect rather than a flaw.
Forecasts Clash With Bets
The bearish outlook implied by Polymarket contrasts sharply with long-term forecasts from major financial institutions. Grayscale Investments previously projected Bitcoin could surpass $126,000 by June 2026, citing institutional adoption and clearer US regulatory frameworks.
Standard Chartered and Bernstein have also forecast Bitcoin reaching $150,000 in 2026, although both firms revised earlier, more aggressive targets due to slower-than-expected inflows into Bitcoin exchange-traded funds. The divergence between institutional forecasts and prediction market sentiment underscores uncertainty surrounding Bitcoin’s medium-term trajectory.
Regulatory Pressure Adds Risk
Adding to market anxiety, Polymarket itself faces regulatory challenges. A Nevada court recently ordered the platform to block access to its event contracts, citing unlicensed wagering concerns. Tennessee and other states have also taken enforcement actions against the platform.
While these developments do not directly affect Bitcoin’s fundamentals, they highlight increasing scrutiny around crypto-adjacent platforms and could influence market participation.
Outlook Remains Uncertain
With Polymarket odds pointing to a high probability of Bitcoin falling below $65,000 in 2026, traders are bracing for prolonged volatility. Whether bearish momentum persists or gives way to a renewed rally may ultimately depend on macro liquidity, regulatory clarity, and institutional demand.
For now, prediction markets suggest caution is firmly back in control.