Bitcoin (BTC) has fallen more than 30% from last month’s peak, marking its worst week since February. Deutsche Bank analysts cite five key factors behind the decline.
The first reason, according to analysts, is the “risk-off” trend in global markets. Bitcoin has been acting more like high-growth tech stocks in recent weeks than as a standalone store of value, and it’s showing a strong correlation with the Nasdaq-100 index.
The second factor is the Fed’s monetary policy. Fed Chair Jerome Powell created hawkish market expectations by stating in December that a rate cut wasn’t guaranteed. Although New York Fed President John Williams struck a more subdued tone, uncertainty persists.
A third factor is regulatory stagnation. Progress on the Digital Asset Market Clarity Act has slowed in the US Senate, leading institutional investors to exercise caution.
The fourth factor, according to Deutsche Bank, is institutional fund outflows. Large investors’ position reductions are putting additional selling pressure on the market. Finally, the shift towards profit-taking by long-term Bitcoin holders is also among the primary drivers of the decline.
Bitcoin traded around $86,000 today after a brief recovery over the weekend, closing at $84,535 on Friday. Analysts warn that volatility could persist in the short term.
*This is not investment advice.