Bitcoin price is coming off its worst week since February, falling more than 30% from last month’s highs, reopening an old question for investors: why is this happening now? According to Deutsche Bank, the sell-off is not driven by a single catalyst, but a combination of market psychology, macro pressures and changing investor behaviour.
The bank first points to a broader risk sentiment. Bitcoin is behaving less like an independent monetary asset and more like an extended-duration technology stock — moving closely with the Nasdaq-100 as investors reduce risk across the board. This relationship has been tightened as macro uncertainty increases.
The other driver is the Federal Reserve. Jerome Powell’s latest comments dampened hopes of a guaranteed rate cut in December, although New York Fed President John Williams later softened the message. Higher-for-longer rates fuel enthusiasm for speculative assets, and the Bitcoin price reaction is no exception.
Regulatory limbo is another weight. Progress on the Digital Asset Market Clarity Act has stalled in the Senate, dampening institutional confidence just as new players began to enter the market.
Meanwhile, institutional outflows are accelerating. Several large funds trimmed positions through November, adding mechanical selling pressure. And long-term holders — some sitting on massive gains after multiple halving cycles — take the profits into year-end, further amplifying downward momentum.
The Bitcoin price was trading near $86,000 on Monday morning after a modest weekend bounce, recovering from Friday’s close around $84.53. The move raises a larger debate: is this a healthy correction or the start of something deeper?
Bitcoin price and the Fed: Waller wants to cut ruts
Fed Governor Christopher Waller added nuance to the macro picture. He backed a rate cut in December, citing weakened labor markets and steady inflation in the 2.4-2.5% range. But he warned that January will be “tricky”, stressing a strictly data-driven, meeting-by-meeting approach.
Waller also recently met with Treasury Secretary Scott Bessent amid speculation about a potential Fed Chair nomination, and noted that he supports continued press conferences — though their format may evolve.
Pompliano: Bitcoiners are built for this volatility
Anthony Pompliano offered a broader lens on CNBC this morning, arguing that the Bitcoin price decline is historically normal — almost mundane — for seasoned holders. Over the past decade, Bitcoin has seen 21 moves of 30% or more, he said, seven of which exceeded 50%. This level of volatility would look like “a global financial crisis every year and a half” in traditional markets, but Bitcoin natives see it as routine.
The panic, he argued, comes from newer Wall Street participants who are not used to such wild swings. Year-end incentives, portfolio rotation and fear-driven selling all add to the pressure.
But with volatility compressing compared to previous cycles, Pompliano believes the current 35% pullback may represent a bottoming process rather than a deep, 70-80% bear market collapse.
Leverage has also been reset, he noted, with open interest sharply lower since the liquidations in October. Combined with extreme readings in the fear and greed index, he argues that the market is setting the stage for stabilization and a gradually higher level.
Pompliano says he’s still accumulating and expects the Bitcoin price to maintain long-term annual returns in the 20-35% range — lower than the past decade, but still stronger than stocks.
Last Friday, the Bitcoin price entered one of its most fragile moments in the cycle, reflecting both price action and on-chain data. It fell to $80,524 on Friday, its lowest since April, down more than 35% from an all-time high and erasing all year-to-date gains, dragging down overall market risk sentiment.
Since then, the price rose to around $84,000, showing high volatility. Glassnode data revealed realized losses rising to levels last seen during the November 2022 FTX collapse, with short-term holders – those who bought within 90 days – selling heavily. Realized loss dominance increased to areas typically associated with panic.
At the time of writing, the bitcoin price is at $86,003.