Bitcoin's $62K Dip: Polymarket Odds Fall, ETF Outflows, and Thin Liquidity

Bitcoin has broken below key support, with price action signaling a clear shift in trader sentiment. The asset dipped toward $62,000 during Tuesday's session, briefly trading just above $62,500 before stabilizing near $64,000. This move extends a broader pullback that has weighed on the market through late February, locking Bitcoin into a short-term downtrend.

The breakdown is mirrored in prediction markets, where trader expectations have sharply repriced. On Polymarket, the probability of a meaningful February rebound has cooled, with contracts betting on Bitcoin closing above major upside thresholds now carrying odds of 2% or less. This repricing reflects growing scepticism around near-term upside as the month draws to a close.

Volume patterns confirm the weakness is being met with selling, not buying. Trading volume has picked up during downside moves, suggesting rallies are being used as exit points rather than accumulation opportunities. This pattern has kept Bitcoin trapped below key technical levels, reinforcing a cautious tone across the market.

The Flow: Weakening Demand and ETF Dynamics

The price weakness is underpinned by a clear deterioration in underlying demand and liquidity. A key signal is the negative Coinbase premium, which indicates a flight of capital from the U.S. exchange to cheaper global markets. This divergence points to reduced institutional participation and a shift toward risk-off behavior, with flows cooling as the month progresses. This softening demand is mirrored in the ETF channel, where outflows have been significant. Year-to-date, the ETF channel has seen over $4 billion in outflows. This sustained selling pressure from a major institutional conduit removes a critical source of bid-side liquidity, making the market more vulnerable to downward shocks.

The market's thin liquidity amplifies this vulnerability. With order book depth constrained, even modest selling can trigger disproportionate price moves. This dynamic explains why Bitcoin has been locked in a downtrend, repeatedly failing to reclaim key resistance zones. The recent rally above $64,000 is a technical bounce, not a reversal of the broader trend of lower highs and persistent selling pressure.

Catalysts and Watchpoints

The immediate technical battleground is the $68,698 resistance level. A sustained daily close above this mark is the necessary trigger to target the next upside zone. Without it, the downtrend remains intact, as repeated failures to reclaim key resistance have reinforced a pattern of lower highs and persistent selling pressure.

Defensive positioning is now the dominant theme as February closes. The sharp repricing on Polymarket shows upside scenarios are largely priced out, with odds of a meaningful rebound at 2% or less. This reflects a market where risk-off behavior is in control, and traders are waiting for clearer signals before re-engaging.

The critical watchpoints are the flow metrics. Sustained ETF outflows have removed a key bid, and any reversal in that channel would be a major positive signal. Equally important are on-chain metrics for signs of renewed accumulation, as the current negative Coinbase premium and thin liquidity make the market highly vulnerable to further downside shocks.