Bitcoin’s (BTC) recent 30% correction has shaken market sentiment, but VanEck’s latest outlook report suggests that the pullback is part of a broader reset rather than a sign of structural weakness.
In a recent report, VanEck said that while speculative demand has cooled, institutional adoption continues to expand, and regulatory shifts could further solidify Bitcoin’s role in global finance.
However, it noted that the current negative sentiment is abnormal since the correction has been in line with previous bull cycles and is likely driven by the poor performance of altcoins, many of which are back to their bear market low.
According to the report, investors are now waiting for the next catalyst to determine whether the market will regain momentum and likened it to sentiment in the months before the spot Bitcoin ETFs launched.
Institutional demand remains strong
The downturn, which saw Bitcoin fall from a January peak of $109,000 to a low of $76,500 on March 11, coincided with its longest ETF outflow streak since inception. Over the past five weeks, Bitcoin ETFs saw roughly $6.4 billion in outflows, reflecting a pullback in risk appetite amid the economic uncertainty.
Futures funding rates have also dropped to their lowest levels since October 2023, signaling a broad reduction in leveraged long positions. Hedge funds have largely exited the basis trade, leading to tighter spreads and lower speculative activity.
VanEck highlighted that even as hedge funds unwind leveraged trades, corporations are integrating Bitcoin into their balance sheets at an accelerating pace. It added that institutional Bitcoin strategies continue to grow despite the shaky market sentiment.
The report highlighted that Strategy (formerly MicroStrategy) continued expanding its Bitcoin treasury strategy, acquiring 20,356 BTC worth $1.99 billion and launching a $2 billion convertible note.
Meanwhile, other firms, including Metaplanet and Semler Scientific, are also scaling their Bitcoin-backed financial strategies.
VanEck also cited the introduction of the REX Shares Bitcoin Convertible Bond ETF as an indicator of rising demand for structured investment products tied to Bitcoin treasuries.
Regulatory efforts and adoption
On the regulatory front, Bitcoin’s macroeconomic narrative continues to strengthen both in the US and abroad as governments are becoming more open to Bitcoin and digital assets.
The Trump administration’s decision to establish a Strategic Bitcoin Reserve signals a major shift in how the US government views Bitcoin, treating it as a strategic asset rather than simply auctioning off seized holdings.
Senator Cynthia Lummis has also introduced legislation to formalize a national Bitcoin reserve strategy, reinforcing the idea that Bitcoin is gaining recognition as a government-held financial asset.
Internationally, Bitcoin’s role in trade and finance is expanding. Russia has begun settling oil transactions with China and India in Bitcoin, a move aimed at bypassing Western sanctions.
In Latin America and Europe, regulatory clarity is fostering deeper institutional engagement, with Coinbase securing a license in Argentina and Deutsche Börse launching Bitcoin custody and settlement services for institutional clients.
According to the report, Bitcoin’s latest correction signals a cooling of speculative enthusiasm, but its long-term fundamentals remain intact. Institutional strategies are maturing, policy shifts are creating new use cases, and Bitcoin’s role in global finance is expanding.
VanEck believes the market now awaits its next catalyst, whether from monetary policy shifts, corporate treasury moves, or geopolitical developments, to determine the direction of the next phase in Bitcoin’s cycle.
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