Deutsche Bank Blames Risk-Off Mood and Hawkish Fed for Bitcoin’s Six-Week Slide

Bitcoin’s recent slide can be attributed to a number of factors that have created something of a perfect storm of headwinds for the OG cryptocurrency, Deutsche Bank analysts wrote in an investor note sent out Monday. 

The analysts explained that a broad market shift towards risk-off assets, a US Federal Reserve that seems to be less inclined to cut interest rates, delays in the passage of the CLARITY Act, reduced institutional interest, and longer-term HODLers taking profits have all contributed to Bitcoin’s precipitous decline since early October.

And Bitcoin’s rocky ride might not be over yet despite signs of stability and support emerging in recent days, according to the global investment bank.

“Whether Bitcoin stabilizes after this correction remains uncertain,” Deutsche Bank’s analysts wrote. 

Unlike prior crashes, driven primarily by retail speculation, this year’s downturn has occurred amid substantial institutional participation, policy developments, and global macro trends.

Deutsche Bank

The analysts outlined the factors contributing to Bitcoin’s weakness:

• Declining risk-on sentiment: Bitcoin has performed similarly to other higher risk assets, such as tech stocks, amid ongoing macro-economic challenges and worries around the Trump tariffs and a potential AI bubble.
• US Fed interest rate decisions: The US Fed has been less than enthusiastic about a third rate cut despite Trump’s constant hectoring of Fed Chair Jerome Powell, potentially impacting Bitcoin’s price.
• CLARITY Act delays: Delays in passing the US crypto market structure bill could be contributing to a loss of momentum in crypto markets, particularly after the excitement of the GENIUS ACT’s passage earlier this year.
• Institutional investors losing interest: Following the history-making US$19 billion (AU$29b) liquidation event that hit crypto markets on October 10, institutional investors have been pulling back from crypto, leading to lower liquidity and resistant price weakness.
• Early BTC investors taking profits: For the past several months, large, long-term Bitcoin holders have been selling steadily, but the dumping picked up pace recently — in the past month, these holders have sold more than 800,000 BTC.

Just days after Bitcoin hit a new all-time high of US$126,200 (AU$195k) on October 6, the crypto market was struck by its largest ever single-day liquidation event on October 10. In the wake of the event, Bitcoin fell as low as US$80,600 (AU$124k) on November 21, according to CoinGecko, a fall of over 36% from its previous high. Bitcoin has since recovered slightly and at the time of writing, it sits at just under US$87,800 (AU$136k).

Related: Coinbase Bitcoin Premium Hits Low Before BTC Price Bounce: Is Recovery in Sight?

Bitcoin Still Not Proven as Store of Value: Deutsche Bank

The analysts pointed out that in addition to the US$19 billion (AU$29m) liquidated from crypto markets on October 10, a further US$5 billion (AU$7.7b) has left Bitcoin and crypto-based ETFs in the weeks since. In total, crypto’s overall market cap has fallen by around 24% or US$1 trillion (AU$1.5t) in just over a month and a half.

This rapid fall prompted Deutsche Bank’s analysts to doubt whether Bitcoin can truly be considered a store of value like other more traditional hedge assets such as gold and US treasuries.

Since October, Bitcoin has behaved more like a high-growth tech stock than an uncorrelated store of value. The average daily correlation between Bitcoin and the Nasdaq 100 index in 2025 YTD is 46%, and the correlation with the S&P 500 has risen to 42%.

Deutsche Bank

“Both correlations have sharply risen in recent weeks, reaching levels similar to those observed during the COVID-driven market stress of 2022,” Deutsche Bank said.

Related: Bitcoin’s ‘Max Pain’ Zone Set Between $73K and $84K, Says Bitwise Analyst

Moving forward, the analysts see more pain potentially in store for Bitcoin investors, with interest rates unlikely to come to the rescue before Powell departs from his role as Fed Chair next year.

“Further uncertainty around the Fed’s interest rate trajectory may continue to spur further declines in Bitcoin’s performance.”