As Bitcoin continues to experience drop after drop, the feared outcome has finally occurred. Today, Bitcoin fell below $70,000 for the first time since November 2024.
While many reasons have been cited for this decline, Deutsche Bank, Germany’s largest commercial bank, said that the drop in Bitcoin was due to a weakening of confidence, not a market crash.
Three Reasons Why Bitcoin (BTC) Is Falling!
According to Coindesk, Deutsche Bank analysts Marion Laboure and Camilla Siazon attributed the decline in Bitcoin’s price to weakening confidence among institutional investors, decreased liquidity, and regulatory uncertainty, rather than structural market dysfunction.
The bank stated that BTC is currently facing “1) persistent institutional outflows, 2) deteriorating correlation with traditional financial markets, and 3) slowing regulatory progress in the US,” and that it is falling for these three reasons.
Deutsche Bank analysts added that the decline was also influenced by BTC’s diminishing status as ‘digital gold’ and its deteriorating correlation with the stock market. While gold is projected to gain over 60% in value by 2025 due to continuous central bank purchases and safe-haven demand, Bitcoin has struggled.
However, according to Deutsche Bank, the biggest pressure is coming from institutional selling. Analysts say that US spot Bitcoin ETFs have experienced intense and sustained outflows since October, including over $7 billion in November, approximately $2 billion in December, and over $3 billion in January.
Not a Collapse, but a Reset!
Analysts conclude that the current declines are less of a collapse and more of a reset—a process of reversing the gains of the past two years. This, they say, is a test of whether Bitcoin can mature and regain support from regulations and institutional capital.
Analysts Marion Laboure and Camilla Siazon stated, “While Bitcoin’s recent price drop may seem dramatic when viewed in its longer-term context, it reflects a pullback from the high speculative gains of the past two years and suggests there is still room for maturation.”
*This is not investment advice.
