Bitcoin Loses $1 Trillion as Deutsche Bank Warns of Weak Market Foundations

Deutsche Bank: Bitcoin’s $1 Trillion Sell-Off Highlights Market Fragility

Bitcoin’s drop to around $80,000 last week exposed the cryptocurrency’s vulnerability to macro pressures, stalled regulatory progress, and thinning liquidity. Deutsche Bank noted the decline, roughly 35% below its early-October peak, erased nearly $1 trillion in value before a rebound toward $87,000. At publication, bitcoin was trading near $86,000.

The bank attributed the sell-off to a combination of risk-off sentiment, higher-for-longer interest-rate expectations, fading regulatory momentum, weakened institutional flows, and profit-taking from long-term holders. Analysts Marion Laboure and Camilla Siazon described the episode as a revival of bitcoin’s “Tinkerbell effect,” where sentiment heavily influences valuation.

Amid U.S. fiscal concerns, renewed U.S.–China tensions, and stretched AI valuations, bitcoin moved more like a high-beta tech stock than a portfolio hedge, with correlations to major equity indexes reaching stress-era levels. Hawkish messaging from the Federal Reserve, even after a rate cut, reinforced bitcoin’s sensitivity to shifting rate expectations.

Regulatory progress has stalled, with delays to the CLARITY Act dampening optimism for clearer market structure and deeper liquidity. Institutional flows have reversed sharply, order books have thinned, and ETF outflows fueled negative liquidity cycles, while long-term holders sold amid rising volatility.

Deutsche Bank emphasized that bitcoin’s long-term maturation remains intact, but uncertainty, leverage, and policy ambiguity continue to magnify drawdowns, even as regulatory clarity and institutional adoption could support future growth