German lender Deutsche Bank (DB) says bitcoins the latest slide is less about a single macro shock and more about a slow erosion of conviction across institutional and regulatory fronts.
In a Wednesday note, the bank argued that three forces are weighing on the asset: persistent institutional outflows, a breakdown in bitcoin’s traditional market conditions and a loss of regulatory momentum that had previously supported liquidity and volatility compression.
The current phase marks a reset rather than a collapse, a test of whether bitcoin can mature beyond faith-driven gains and regain support from regulation and institutional capital, the report said.
“While bitcoin’s recent price decline seems significant relative to its longer history, it reflects a retreat from highly speculative gains over the past two years, suggesting it still has room to mature,” analysts Marion Laboure and Camilla Siazon wrote.
Despite its longstanding reputation as “digital gold,” bitcoin has deviated sharply from the traditional safe haven this year. While gold has rallied, up more than 60% by 2025 on sustained central bank purchases and safe-haven demand, bitcoin has struggled, with multiple monthly declines and underperforming key risk assets. 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 decline, with bitcoin falling more than 40% from its highs and posting its fourth consecutive monthly decline, a streak not seen since before the pandemic. Unlike previous macro-driven sell-offs, this decline has occurred even as stocks and gold have rallied, underscoring weakening demand and waning momentum.
According to the analysts, the most immediate pressure comes from institutional sales. US spot bitcoin exchange-traded funds (ETFs) have recorded strong and sustained outflows since October, including more than $7 billion in November, around $2 billion in December and over $3 billion in January. As institutions reduce exposure, trading volume has thinned, making 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 that US consumer crypto adoption has fallen to around 12%, down from 17% by mid-2025, a sign that enthusiasm is waning beyond Wall Street.
The analysts also highlighted bitcoin’s growing detachment from familiar market anchors. The asset has diverged sharply from gold, which rose 65% in 2025, while bitcoin fell 6.5%, undermining its “digital gold” narrative. At the same time, bitcoin’s correlation with stocks has fallen to the mid-teens, well below levels seen in previous macro-driven selloffs, where it typically moved in lockstep with tech stocks.
Regular uncertainty is the third headwind. Progress on the bipartisan Digital Asset Market CLARITY Act has stalled in Congress due to disagreements over stablecoin provisions. Deutsche Bank said the pause has reversed earlier gains in market stability, with bitcoin’s 30-day volatility bouncing back above 40%, near late October levels.
Still, the bank warned against overreading the decline. Even after the pullout, bitcoin remains about 370% higher than at the start of 2023, underscoring how much speculative premium had accumulated during the rally.
Wall Street bank Citi ( C ) said the world’s largest cryptocurrency is trading below key ETF cost levels and nearing its pre-election lows as access to these vehicles fades and headwinds emerge, in a Tuesday note to clients.
Bitcoin was trading around $69,500 at the time of publication.
Read more: Bitcoin Nears Pre-Election Floor as ETF Flows Stall, Citi Says
