Majority of Institutional Investors Say Bitcoin Is Undervalued: Coinbase

Bitcoin's price struggles to maintain a foothold above $90,000 have not deterred institutional investors from seeing potential. According to Coinbase, the majority of institutional investors believe Bitcoin is undervalued at current levels. This sentiment contrasts with recent market moves, including ETF outflows and a drop in open interest for Bitcoin contracts.

The market has been affected by global macroeconomic pressures, including US-EU trade tensions and a sell-off in Japanese government bonds. Spot Bitcoin ETFs saw outflows of $483.4 million, with the Grayscale Bitcoin Trust ETF (GBTC) leading the exodus at $160.8 million. Analysts link these outflows to increased institutional caution amid ongoing geopolitical and liquidity concerns.

Meanwhile, Bitcoin's price continues to fluctuate within a bearish range. The open interest indicator has fallen back to $27.9 billion, signaling reduced engagement by institutional players. Bitcoin is also showing renewed correlation with the U.S. dollar, diverging from its independent narrative and reflecting broader market uncertainty.

Why Did Institutional Investors Make This Assessment?

Despite these challenges, institutional investors have not entirely lost confidence. Firms like PwC have confirmed that institutional adoption of crypto has reached a point of irreversible growth. This adoption is driven by a growing recognition of blockchain technology's role in reshaping financial infrastructure.

Coinbase's advisory board is addressing future threats such as quantum computing, indicating long-term institutional support. Additionally, companies like Ledger are exploring a U.S. IPO with top investment banks, aiming for a valuation above $4 billion. These developments suggest that while short-term volatility persists, the long-term institutional interest in Bitcoin remains intact.

How Are Market Dynamics Influencing Bitcoin's Trajectory?

The current environment is marked by uncertainty and subdued volatility. Bitcoin's recent performance, including a drop in realized capital gains and net realized losses, indicates a shift in investor sentiment. Short-term whale activity has also taken center stage, with new whale holders—those with large BTC positions held under 155 days—exerting more influence on Bitcoin's market direction.

Analysts are watching for macroeconomic updates, particularly U.S. jobless claims and developments in the U.S.-EU trade tensions. A weaker jobs report could reinforce risk-off sentiment and further weigh on Bitcoin's price. Meanwhile, geopolitical tensions remain focal points for traders and policymakers.

What Are Analysts Watching for in the Near Term?

On Polymarket and Kalshi, the chances of Bitcoin retaking $100,000 before February are below 10%. Traders are also pricing in a significant drop, with 65% odds that Bitcoin will break $100,000 before June 2026.

The NYSE's plan to launch a 24/7 blockchain-based tokenized exchange for stocks and ETFs in 2026 could reshape the market landscape. If successful, this initiative could boost liquidity and attract new institutional investors to crypto markets. However, regulatory challenges remain, with efforts to pass the Digital Asset Market Clarity Act facing hurdles in both the Senate Agriculture and Banking Committees.

As the market continues to navigate short-term uncertainties, investors are advised to monitor macroeconomic updates and regulatory developments. Institutional investors, while cautious, remain optimistic about Bitcoin's long-term potential despite current price pressures.