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Bitcoin is experiencing a notable downturn that appears to reflect weakening investor confidence rather than a fundamental structural flaw in the cryptocurrency market, amid mounting pressure from institutional outflows, declining liquidity, and a slowing regulatory trajectory.

The decline comes as institutional investment flows continue to weaken, particularly through spot Bitcoin exchange-traded funds (ETFs), which have recorded sustained outflows in recent months. These withdrawals have reduced trading volumes and increased price sensitivity to fresh selling activity. As liquidity has thinned, Bitcoin has become more vulnerable to sharp swings, undermining its ability to absorb selling pressure.

At the same time, Bitcoin has lost its traditional correlation with both gold and equities, further heightening its fragility in an increasingly risk-averse global environment. While gold has continued to post strong gains—supported by central bank purchases and rising demand for safe-haven assets—Bitcoin has struggled, logging several consecutive months of losses.

The world’s largest cryptocurrency is now trading more than 40% below its October peak, underscoring the scale of the confidence erosion facing digital assets, even as broader market fundamentals remain largely intact.