Deutsche Bank: The recent decline in Bitcoin is due to a loss of confidence, not a collapse of market structure

Deutsche Bank stated in a report on Wednesday that the recent decline in Bitcoin is more due to a slow erosion of confidence among institutions and regulators, rather than a single macro shock.

The bank believes that three forces are putting pressure on the asset: ongoing institutional capital outflows, the breakdown of traditional market relationships for Bitcoin, and a weakening of regulatory momentum that previously supported liquidity and volatility compression. The report noted that U.S. Bitcoin spot ETFs have recorded significant capital outflows since October, with over $7 billion flowing out in November, about $2 billion in December, and over $3 billion in January. The correlation between Bitcoin and stocks and gold has weakened, and its narrative as "digital gold" has been affected, with gold rising over 60% this year while Bitcoin has fallen 6.5%. Additionally, amid the controversy in Congress over stablecoin provisions, bipartisan efforts on the digital asset market CLARITY Act have stalled. Deutsche Bank's survey shows that the cryptocurrency adoption rate among U.S. consumers has dropped from around 17% in mid-2025 to about 12%. Furthermore, Citi pointed out in a report on Tuesday that as inflows slow and resistance increases, Bitcoin's trading price is below the key ETF cost level and is approaching its pre-election price bottom.