German lender Deutsche Bank (DB) says bitcoin The last slide has less to do with a one-time macroeconomic shock and more to do with a slow erosion of conviction on the institutional and regulatory fronts.
In a note on Wednesday, the bank argued that three forces are weighing on the asset: sustained institutional outflows, a breakdown in traditional bitcoin market relationships, and a loss of regulatory momentum that had previously supported liquidity compression and volatility.
The current phase marks a reset rather than a crash, a test of whether Bitcoin can mature beyond belief-driven gains and regain support from regulation and institutional capital, according to the report.
“While bitcoin’s recent price decline appears sharp compared to its longer history, it reflects a reversal of the highly speculative gains of the past two years, suggesting it still has room to mature,” wrote analysts Marion Laboure and Camilla Siazon.
Despite its long reputation as “digital gold,” bitcoin has moved markedly away from the traditional safe haven this year. While gold has recovered, up more than 60% in 2025 due to persistent central bank buying and safety-seeking demand, bitcoin has struggled, recording multiple monthly declines and key risk assets underperforming. Correlations with both stocks and gold have eroded, leaving BTC isolated as broader markets stabilize.
Since peaking in October 2025, crypto markets have entered a sustained recession, with bitcoin falling more than 40% from its highs and recording its fourth consecutive monthly decline, a streak not seen since before the pandemic. Unlike previous macroeconomic sell-offs, this drop has come even as stocks and gold have rallied, underscoring weakening demand and fading momentum.
The most immediate pressure, according to analysts, comes from institutional sales. US spot bitcoin exchange-traded funds (ETFs) have seen large and persistent outflows since October, including more than $7 billion in November, approximately $2 billion in December, and more than $3 billion in January. As institutions reduce their exposure, trading volumes have reduced, leaving bitcoin more vulnerable to sharp price swings.
Sentiment data reinforces the trend. The Crypto Fear & Greed Index has fallen back toward “extreme fear,” while Deutsche Bank’s own surveys show cryptocurrency adoption by US consumers falling to around 12%, down from 17% in mid-2025, a sign that enthusiasm is fading beyond Wall Street.
Analysts also highlighted bitcoin’s growing detachment from familiar market anchors. The asset has moved sharply away from gold, which gained 65% in 2025, while bitcoin fell 6.5%, undermining its “digital gold” narrative. At the same time, bitcoin’s correlation with stocks has fallen into the mid-teens, well below levels seen in previous macro-driven sell-offs, when it typically moved at the same pace as tech stocks.
Regulatory uncertainty is the third obstacle. Progress on the bipartisan Digital Asset Market CLARITY Act has stalled in Congress amid disputes over stablecoin provisions. Deutsche Bank said the pause has reversed earlier gains in market stability, with bitcoin’s 30-day volatility returning to above 40%, close to late October levels.
Still, the bank warned against reading too much into the decline. Even after the drawdown, bitcoin is still about 370% higher than it was at the start of 2023, underscoring how much speculative premium had built up during the rally.
Wall Street bank Citi (C) said in a note to clients on Tuesday that the world’s largest cryptocurrency is trading below key ETF cost levels and is approaching its pre-election low price as inflows into these vehicles fade and headwinds increase.
Bitcoin was trading around $69,500 at the time of this publication.
Read more: Bitcoin Nears Pre-Election Bottom as ETF Flows Stagnate, Says Citi
