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Deutsche Bank Warns: Bitcoin Faces Tougher Recovery
25 Nov
Summary
- Bitcoin's recent 30% drop is harder to recover from than past sell-offs.
- Crypto adoption has declined, weakening a key driver of bitcoin's value.
- Institutional investors via ETFs amplify selling and liquidity risks.
Bitcoin's current pullback, exceeding 30% from its peak, is presenting a more challenging recovery scenario compared to past corrections, Deutsche Bank analysts have stated. Unlike previous downturns largely fueled by retail speculation, this year's decline is occurring amidst significant institutional involvement and broader economic trends.
The analysts highlighted a notable decrease in crypto adoption, with usage dipping among retail traders, which weakens a fundamental driver of bitcoin's value. Furthermore, the introduction of bitcoin ETFs has introduced a new dynamic. While institutional investment has historically boosted gains, this exposure now contributes to a feedback loop of reduced liquidity and intensified selling pressure.
Consequently, the cryptocurrency's ability to rebound from its current slump is uncertain. Thinning liquidity in bitcoin's order books limits its capacity to recover from macroeconomic headwinds. The long-term stabilization of bitcoin's price following this correction remains a significant question.
