Core Insights - Bitcoin's integration into Wall Street was expected to provide stability but has instead led to increased vulnerability due to reliance on American capital, which is currently retreating [1] Group 1: Market Dynamics - Since October 10, approximately $8.5 billion has exited US-listed spot Bitcoin exchange-traded funds, and futures exposure on the Chicago Mercantile Exchange has decreased by about two-thirds from its late-2024 peak to around $8 billion [2] - Bitcoin prices on Coinbase have consistently traded at a discount compared to offshore exchange Binance, indicating ongoing selling pressure from US investors [2] - The shift in market dynamics has seen Bitcoin's price, which reached a record of $67,500 on October 6, now stalling without a clear catalyst for recovery [4] Group 2: Institutional Investment Trends - The initial institutional investment thesis has faltered, as Bitcoin has not performed as a hedge against inflation or market stress, often declining alongside traditional assets [5] - The unwinding of crypto trades has resulted in a thinner market, with demand for borrowed exposure on the CME at its lowest since mid-2023, leading to fewer forced buyers during price increases and less natural absorption during sell-offs [6] - Hedge funds previously engaged in basis trades, buying spot Bitcoin while selling futures contracts, but this strategy lost its appeal when the spread compressed below Treasury yields after October 10 [7][8]