This Is a Troubling Trend for Bitcoin

A year ago, it looked like Bitcoin (CRYPTO: BTC) might be unstoppable. It was hitting new records, and there was a crypto-friendly administration in place that was looking to help grow the crypto markets. Everything seemed rosy for the industry.

The leading cryptocurrency was doing well, and even by the end of 2025, optimism remained fairly high. While Standard Chartered would end up slashing its target for Bitcoin for the coming year in half, it still expected the leading cryptocurrency to potentially hit $150,000 in 2026.

Entering trading on Tuesday, however, Bitcoin was around just $77,000. This year, it has fallen by 12%, and there's been a concerning trend of late, which could suggest the decline may be far from over.

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Money continues to leave spot Bitcoin ETFs

There's been a flood of money leaving exchange-traded funds (ETFs) tracking Bitcoin recently. From May 15 through May 22, there's been a net outflow from spot Bitcoin ETFs totaling more than $1.5 billion. Money has consistently been leaving spot Bitcoin ETFs of late, in what may be a concerning trend of investors pivoting away from Bitcoin and into other investments.

This year, Bitcoin hasn't proven to be a safe-haven investment like gold or silver. In times of adversity, it has struggled alongside the overall market. When the S&P 500 fell in the early part of the year, so too did Bitcoin. And with a sluggish performance this year, it hasn't been a popular buy amid more favorable market conditions, either, leaving investors with little incentive to pile money into the cryptocurrency, aside from the hope that its value may skyrocket in the long run.

Could Bitcoin recover this year?

Bitcoin is a volatile investment, so there's always the possibility that it can take off on a moment's notice due to a promising development in the crypto markets. However, I'm not optimistic that it will happen anytime soon, given the state of the economy. Inflation is up, and there are growing concerns that interest rates may rise this year rather than fall. That would be bad news for speculative investments such as Bitcoin, which could lead to further declines for the digital currency.

Until economic conditions improve, Bitcoin may continue to struggle. However, if you're bullish on its long-term prospects, now may be an optimal time to invest, given that it's down close to 40% from its 52-week high. But you may need a lot of patience, as a rally may not necessarily be around the corner.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin. The Motley Fool has a disclosure policy.