CVDD Model Signals Bitcoin Is Not Yet Deeply Undervalued: Drawdown Lags Historical Cycles

Bitcoin ETFs have reversed early 2026 inflows, with spot Bitcoin and Ether ETFs shedding over $1 billion in combined outflows since Tuesday. This marks a pullback following a brief rebound at the start of the year. The shift reflects renewed caution among investors, as sentiment softened and early inflows proved fragile. Market participants are now closely monitoring the impact of macroeconomic developments and regulatory updates on digital assets.

Bitcoin ETFs recorded roughly $1.13 billion in outflows between Tuesday and Thursday, offsetting $1.17 billion in inflows on Jan. 2 and Monday. Spot Ether ETFs mirrored this trend, with about $258 million exiting since Wednesday. The reversal erases gains accumulated in the opening days of the year, signaling a cautious stance among investors.

The broader crypto market remains in a state of fear, as reflected in the Crypto Fear & Greed Index. Bitcoin holds above $90,000, but the asset faces key resistance levels, with a recent correction to $89,311. Ethereum and XRP also face increasing pressure as recovery above critical thresholds proves elusive.

Why Did This Happen?

Bitcoin spot ETFs face low demand, with outflows intensifying as risk-off sentiment persists. Only two of the nine U.S.-listed ETFs experienced inflows on Thursday, with cumulative inflow levels at $56.65 billion and net assets at $117.66 billion. The outflows reflect a broader reassessment of risk assets, as investors trim exposure to digital assets.

Ethereum ETFs extended their outflow streak for the second consecutive day, with investors withdrawing approximately $159 million on Thursday. The ETFs had seen a positive turnaround at the start of the year, drawing significant inflows. However, renewed caution has led to a sharp reversal in sentiment.

What Are Analysts Watching Next?

VanEck projects a 15% compound annual growth rate for Bitcoin, leading to a price of $2.9 million per coin by 2050. In its most optimistic scenario, Bitcoin could reach $53.4 million per coin by 2050 if it captures 20% of international trade and 10% of domestic GDP. This forecast is based on "hyper-Bitcoinization," where the asset could surpass gold as a primary global reserve asset.

Market analysts are also monitoring Venezuela's potential "shadow" Bitcoin reserve, which could serve as a near-term catalyst for Bitcoin. If accurate, this would place Venezuela among the largest sovereign holders of BTC. Such an outcome could signal a broader adoption of digital assets in global financial systems, particularly in regions seeking alternatives to traditional fiat currencies.

Geopolitical developments, including U.S. court rulings on Trump-era tariffs, remain a key focus for investors. A ruling against the tariffs could signal reduced uncertainty and potentially inject volatility into crypto, equity, and fixed-income markets. Investors are watching for clarity as markets remain sensitive to macroeconomic developments.

What Implications Do These Trends Have for Investors?

The shift in ETF flows highlights growing near-term caution among investors, even as select altcoin products continue to see steady demand. With markets awaiting clarity from potential U.S. court rulings on tariffs, near-term price action is likely to remain sensitive to macro developments.

The broader shift also reflects the impact of global tax reporting standards on crypto markets. Colombia recently advanced crypto tax rules aligned with OECD-developed international standards, including the Crypto-Asset Reporting Framework (CARF). These rules require crypto exchanges and service providers to report identifying information and transaction data for "reportable" users. The move is part of a global effort to close reporting gaps and strengthen oversight of digital asset activity.

The rollout of global reporting standards is expected to shape the future of crypto regulation. Countries including the U.S., where lawmakers may pass the CLARITY Act in 2026, are moving to define how digital assets are classified, taxed, and issued. These developments will have far-reaching implications for investors, regulators, and service providers.

What Are the Long-Term Projections?

VanEck's long-term capital market assumptions suggest that Bitcoin could become a key part of global and domestic trade settlement. The firm's base case assumes a BTC price of $2.9 million by 2050, while its bear case forecasts a price of $130,000 under a 2% CAGR. These projections highlight the wide range of potential outcomes for Bitcoin as it continues to evolve as a global financial asset.

The firm also believes that central banks will begin allocating up to 2.5% of their balance sheets to Bitcoin as a hedge. This would represent a significant shift in institutional adoption and could further solidify Bitcoin's role as a reserve asset. However, reaching these levels would require widespread adoption and integration into global financial systems.

As 2026 unfolds, investors are closely watching for signs of renewed inflows, regulatory clarity, and macroeconomic stability. The next few months could determine whether Bitcoin enters a new phase of growth or remains in a period of consolidation.