Deutsche Bank, a major German financial institution, has indicated that the recent decline in bitcoin’s value is not triggered by a single macroeconomic event but rather stems from a gradual weakening of confidence among institutional investors and regulators.
In their analysis released on Wednesday, the bank identified three main factors pressuring bitcoin: ongoing withdrawals by institutions, disruptions in bitcoin’s usual market correlations, and diminishing regulatory support that had previously helped stabilize liquidity and reduce volatility.
The current situation represents more of an adjustment phase than a total collapse. It serves as a critical test to determine if bitcoin can evolve beyond speculative enthusiasm to regain backing from regulatory frameworks and institutional capital.
Analysts Marion Laboure and Camilla Siazon commented that although the recent price drop appears significant compared to its historical trends, it mainly reflects a pullback from highly speculative gains over the past two years. This suggests there remains potential for maturation within the asset.
Despite being long regarded as “digital gold,” bitcoin has diverged notably from this role during 2025. While gold surged over 60% due to consistent central bank purchases and safe-haven demand, bitcoin faced multiple monthly losses and underperformed key risk assets. Its correlations with both equities and gold have weakened considerably, isolating it even as broader markets have stabilized.
Since reaching its peak in October 2025, cryptocurrency markets have experienced sustained declines. Bitcoin alone has dropped more than 40% from its highs with four consecutive months of losses—a streak unseen since before the pandemic era. Unlike prior selloffs driven by macroeconomic shocks, this downturn occurred despite rebounds in stocks and gold prices—highlighting declining demand for crypto assets along with waning momentum.
The most immediate pressure comes from institutional investors selling off their holdings. U.S.-based spot bitcoin ETFs recorded substantial outflows starting October: exceeding $7 billion in November; around $2 billion in December; followed by over $3 billion lost through January alone. Reduced exposure among these large players has led to thinner trading volumes which increases vulnerability to sharp price fluctuations.
This trend is supported by sentiment indicators such as the Crypto Fear & Greed Index sliding toward “extreme fear.” Additionally, Deutsche Bank’s surveys reveal U.S consumer adoption of cryptocurrencies dropping approximately five percentage points—from about 17% mid-2025 down near 12%. This signals fading enthusiasm extending beyond professional traders into retail participants too.
The analysts also noted how significantly detached bitcoin has become from traditional market benchmarks lately. Gold appreciated roughly 65% throughout 2025 while bitcoin declined nearly seven percent—undermining its reputation as “digital gold.” Simultaneously, correlation between bitcoins’ price movements versus equities fell into mid-teens percentages—far below previous macro-driven selloff levels when it typically mirrored tech stock trends closely.
A third challenge lies within regulatory uncertainty surrounding digital assets legislation like the bipartisan Digital Asset Market CLARITY Act currently stalled amid disagreements related primarily to stablecoin regulations on Capitol Hill. Deutsche Bank pointed out this legislative pause reversed earlier improvements seen across market stability measures—with thirty-day volatility metrics rising above forty percent again near late-October figures for Bitcoin’s price swings.
Nevertheless they urged caution against interpreting these declines too negatively given Bitcoin still trades approximately three hundred seventy percent higher than early-2023 valuations—highlighting how much speculative premium had been priced during previous rallies overall.
Citi (C), another Wall Street giant banking firm recently noted that BTC is trading below crucial ETF cost thresholds approaching pre-election lows amid dwindling inflows coupled with mounting challenges facing crypto markets.
At publication time, bitcoin was valued at roughly $69,500.
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