The last wave of sales followed a four-day drop triggered by the news that US President Donald Trump would appoint Kevin Warsh as the next president of the Federal Reserve.

Warsh is known for supporting higher real interest rates and a lower Fed balance sheet, and his appointment weighed heavily on risky assets. Bitcoin recorded its largest daily decline since 2018 at the end of January.

"Cryptocurrency pessimists are firmly in control, with Bitcoin and other major altcoins going back in time to revisit levels not seen since 2024," Han Tan, chief market analyst at Bybit Learn, told Investing.com.

While stocks and gold have attracted buyers in the falls, "the risk appetite around cryptocurrencies is struggling to return," Tan added, highlighting that approximately half a trillion dollars in total cryptocurrency market value was erased last week.

"Traders and retail investors are being courted by traditional assets lately, which raises the bar for the prospects of a sustained recovery of cryptocurrencies for now, given that important catalysts to boost confidence seem scarce on the near horizon of cryptocurrencies," the analyst continued.

Despite the last drop, Bitcoin remains about 370% higher than in early 2023. In a note to customers, Deutsche Bank analyst Marion Laboure said that the broader drop reflects a mixture of "1) hawkish signals from the Fed; 2) institutional outflows and reduced liquidity; and 3) stagnant regulatory momentum."

A major obstacle has been the sustained withdrawals of Bitcoin ETFs at sight from the US. Laboure said these ETFs saw outflows of more than $7 billion in November, about $2 billion in December and more than $3 billion in January alone.

"This constant sale, in our view, signals that traditional investors are losing interest, and general pessimism about cryptocurrencies is growing," Laboure wrote.

The deterioration in sentiment was reflected in the Cryptocurrency Fear and Greed Index, which fell again to about 15, a level associated with "extreme fear", while the bank's consumer surveys show that the adoption of cryptocurrencies in the US fell to about 12% of the 17% last summer.

"Ultimately, institutions reducing their exposure to Bitcoin led to less money being traded, which in turn made the price of Bitcoin fall even more," said the analyst.

Laboure also pointed to a break in traditional Bitcoin market relations. While gold skyrocketed last year, Bitcoin ended 2025 lower, suggesting that it is no longer acting as "digital gold". Its correlation with the main U.S. stock indices also fell drastically, with Bitcoin performing lower even when stocks remained.

Meanwhile, regulatory developments that previously boosted cryptocurrency prices have stagnated. Progress in the Digital Assets Market CLARITY Act, which aims to establish a clearer framework for digital assets in the US, has been stopped in Congress for months, pushing volatility back to late 2025 levels.

"Looking ahead, we believe that a key test for Bitcoin's ability to recover sustainably will be the approval of the CLARITY Act," Laboure commented, with recent reports indicating that the White House urged the two lobby groups to reach an agreement by the end of February.

Laboure said that Bitcoin's recent movements signal the end of the so-called "Tinkerbell effect", with the asset moving away from a purely speculative phase and approaching a more institutional role. She noted that Bitcoin is unlikely to replace gold or traditional currencies, as it lacks the essential characteristics of a means of exchange or value reserve, and that volatility "is not a bug, but will probably persist as an inherent feature".

Looking to the future, the analyst said that regulatory progress, improved custody solutions and ETFs will be key to the maturation of Bitcoin, adding that the world's largest cryptocurrency "will not replace other traditional assets, but it is also unlikely to disappear".

The last wave of sales followed a four-day drop triggered by the news that US President Donald Trump would appoint Kevin Warsh as the next president of the Federal Reserve.

Warsh is known for supporting higher real interest rates and a lower Fed balance sheet, and his appointment weighed heavily on risky assets. Bitcoin recorded its largest daily decline since 2018 at the end of January.

"Cryptocurrency pessimists are firmly in control, with Bitcoin and other major altcoins going back in time to revisit levels not seen since 2024," Han Tan, chief market analyst at Bybit Learn, told Investing.com.

While stocks and gold have attracted buyers in the falls, "the risk appetite around cryptocurrencies is struggling to return," Tan added, highlighting that approximately half a trillion dollars in total cryptocurrency market value was erased last week.

"Traders and retail investors are being courted by traditional assets lately, which raises the bar for the prospects of a sustained recovery of cryptocurrencies for now, given that important catalysts to boost confidence seem scarce on the near horizon of cryptocurrencies," the analyst continued.

Despite the last drop, Bitcoin remains about 370% higher than in early 2023. In a note to customers, Deutsche Bank analyst Marion Laboure said that the broader drop reflects a mixture of "1) hawkish signals from the Fed; 2) institutional outflows and reduced liquidity; and 3) stagnant regulatory momentum."

A major obstacle has been the sustained withdrawals of Bitcoin ETFs at sight from the US. Laboure said these ETFs saw outflows of more than $7 billion in November, about $2 billion in December and more than $3 billion in January alone.

"This constant sale, in our view, signals that traditional investors are losing interest, and general pessimism about cryptocurrencies is growing," Laboure wrote.

The deterioration in sentiment was reflected in the Cryptocurrency Fear and Greed Index, which fell again to about 15, a level associated with "extreme fear", while the bank's consumer surveys show that the adoption of cryptocurrencies in the US fell to about 12% of the 17% last summer.

"Ultimately, institutions reducing their exposure to Bitcoin led to less money being traded, which in turn made the price of Bitcoin fall even more," said the analyst.

Laboure also pointed to a break in traditional Bitcoin market relations. While gold skyrocketed last year, Bitcoin ended 2025 lower, suggesting that it is no longer acting as "digital gold". Its correlation with the main U.S. stock indices also fell drastically, with Bitcoin performing lower even when stocks remained.

Meanwhile, regulatory developments that previously boosted cryptocurrency prices have stagnated. Progress in the Digital Assets Market CLARITY Act, which aims to establish a clearer framework for digital assets in the US, has been stopped in Congress for months, pushing volatility back to late 2025 levels.

"Looking ahead, we believe that a key test for Bitcoin's ability to recover sustainably will be the approval of the CLARITY Act," Laboure commented, with recent reports indicating that the White House urged the two lobby groups to reach an agreement by the end of February.

Laboure said that Bitcoin's recent movements signal the end of the so-called "Tinkerbell effect", with the asset moving away from a purely speculative phase and approaching a more institutional role. She noted that Bitcoin is unlikely to replace gold or traditional currencies, as it lacks the essential characteristics of a means of exchange or value reserve, and that volatility "is not a bug, but will probably persist as an inherent feature".

Looking to the future, the analyst said that regulatory progress, improved custody solutions and ETFs will be key to the maturation of Bitcoin, adding that the world's largest cryptocurrency "will not replace other traditional assets, but it is also unlikely to disappear".