Bitcoin Under Pressure: Deutsche Bank Analyzes Five Reasons for Massive Crash

Historic Collapse Shakes Crypto Market

Bitcoin has experienced a dramatic crash in recent weeks. In a short period of time, the cryptocurrency fell from its peak of 126,000 US dollars to 82,000 US dollars – a decline of 35 percent ^[1]. The anticipated year-end rally failed to materialize; instead, fear dominates the market.

Analysts at Deutsche Bank told Decrypt that the situation remains uncertain: "Whether Bitcoin will stabilize after this correction remains unclear" ^[1]. Particularly noteworthy is that this downturn has occurred against the backdrop of significant institutional investor participation, political developments, and global macro trends.

Bitcoin Behaves Like Tech Stock Rather Than Store of Value

Contrary to its often-promoted role as a "defensive hedge" like gold or US Treasury bonds, Bitcoin is currently behaving differently. "Since October, BTC has been acting more like a high-growth technology stock than like an uncorrelated store of value," the analysts conclude ^[1].

Five Central Reasons for the Crash

Deutsche Bank has identified several factors that led to the massive price collapse:

Macroeconomic Uncertainty: Bitcoin is suffering from macroeconomic concerns, Trump's unpredictable trade war, and fears of overvalued AI companies ^[1].

Interest Rate Concerns Weigh Down: The crypto flagship currency typically performs best in a low interest rate environment. Contradictory signals from the US Federal Reserve regarding further rate cuts are weighing on the BTC price ^[1].

Regulatory Uncertainty: While the GENIUS Act was successfully passed, the CLARITY Act – a key market structure bill – has been stalled for months, which could hinder Bitcoin adoption ^[1].

Massive Profit-Taking: After reaching record highs, long-term investors have begun taking profits and sold around 800,000 BTC – the largest sell-off of this kind since January 2024 ^[1].

Declining Liquidity: The withdrawal of institutional investors from the crypto market is significantly hampering a sustainable price recovery ^[1].

Mining Industry Under Additional Pressure

Parallel to the price decline, the Bitcoin mining industry is struggling with a tightening of economic conditions. The network hashrate reached a record high of 1.16 ZH/s in October, while simultaneously the Bitcoin price fell toward 81,000 US dollars ^[2].

The hashprice, which measures miners' revenue per unit of computing power, fell below 35 US dollars per hash and is thus below the median of 45 US dollars per PH/s reported by publicly listed mining companies ^[2]. Several operators are approaching the break-even point.

Amortization periods for mining rigs have extended to over 1,200 days, while at the same time financing costs are rising across the sector ^[2]. This puts mining profitability at the weakest levels since records began.

Cautious Recovery with Question Marks

Meanwhile, the BTC price has managed to rise back to 88,000 US dollars, but the sustainability of this recovery movement remains questionable ^[1]. The combination of macroeconomic uncertainties, regulatory hurdles, and the strained situation in the mining industry suggests that the crypto market could remain volatile for some time to come.