TLDR:
- Bitcoin dropped 30% from recent highs in its worst week since February as multiple factors converged
- Deutsche Bank cites Fed hawkishness and stalled crypto legislation among five key pressure drivers
- Mid-sized Bitcoin holders and large whales have flipped back to accumulation after extended selloff
- Institutional outflows and long-term holder profit-taking added significant downward pressure
Bitcoin lately posted its worst weekly performance since February.
The largest cryptocurrency dropped over 30% from its recent peak. Deutsche Bank analysts have outlined five specific factors driving the pressure. The downturn has shaken both retail and institutional investors.
Deutsche Bank Breaks Down the Bitcoin Selloff
Bitcoin traded near $86,000 on Monday morning after a modest weekend recovery. The digital asset closed around $84,535 on Friday.
According to CoinGecko data, Bitcoin is trades at $86,844.85 with a 24-hour trading volume exceeding $72 billion at press time. The price shows a 0.34% increase over 24 hours but remains down 4.76% across the past week.
Deutsche Bank pointed to a risk-off sentiment sweeping through markets as the first major factor. BTC has been tracking closely with the Nasdaq-100 index.
The correlation suggests the asset is behaving more like a high-growth tech stock than an independent store of value. Investors have been rotating out of speculative assets across the board.
Federal Reserve policy signals emerged as the second key driver.
Jerome Powell warned that a December rate cut is not guaranteed. The hawkish stance from the Fed chair created additional downward pressure on crypto markets. New York Fed President John Williams later softened the tone somewhat.
Regulatory uncertainty represents the third factor identified by the bank.
Progress on the Digital Asset Market Clarity Act has stalled in the Senate. The legislative slowdown has dampened institutional enthusiasm for crypto exposure.
Market participants had been anticipating clearer regulatory frameworks.
Distribution Patterns Show Signs of Exhaustion
Institutional outflows mark the fourth pressure point according to Deutsche Bank. Large investors have been pulling capital out of Bitcoin positions.
The exodus has added significant selling pressure to already stressed markets. Trading desk data confirms the trend among professional investors.
Long-term holders cashing in gains complete the five-factor analysis. Early Bitcoin adopters have been taking profits after substantial appreciation.
The distribution from this cohort has contributed to price weakness. Walter Bloomberg shared the Deutsche Bank breakdown on social media.
Recent cohort data suggests the distribution phase may be reaching its end. CryptosRus noted that mid-sized holders controlling 10 to 100 Bitcoin have flipped back to accumulation mode.
Whales holding over 10,000 Bitcoin have also started adding to positions again. The 11-day selling cascade appears to have flushed out leveraged long positions.
Futures market pressure has eased as buyers return to spot markets. The price has stabilized despite continued selling from some cohorts. Holders controlling between 1,000 and 10,000 Bitcoin still need to reverse their distribution pattern.
Market structure now resembles previous local bottoms formed through washout selling rather than euphoric peaks.
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Source: https://blockonomi.com/5-reasons-why-bitcoin-has-been-under-pressure-deutsche-bank/