Bitcoin has climbed above $86,000 and altcoins have begun to recover, signaling a positive turn after the harsh downturn faced last week. The cryptocurrency market, at least, seems to have stabilized from its decline, which brings some relief. If ETF inflows today meet expectations, cryptocurrency traders may breathe easier. Deutsche Bank has analyzed the latest downturn and outlined five key reasons for it. Meanwhile, the 2022 crypto prognosticator Capo has shared new predictions.
Reasons Behind the Crypto Market Decline
Bitcoin recently experienced one of its poorest performances, breaking historical records in various metrics. The panic, swift sales, and liquidations that occurred were not ordinary events. Deutsche Bank analysts have succinctly identified five reasons for the decline. These causes have complex backgrounds, but the general reasons are as follows:
- •A flight from risk. Bitcoin is acting more like a high-growth tech stock (strongly correlated with the Nasdaq-100) than an independent “store of value.”
- •Hawkish signals from the Fed. In October, Powell indicated that a rate cut in December wasn’t guaranteed (though NY Fed’s John Williams later softened this stance). Williams was the cause of Friday’s uptrend.
- •Regulatory delays. The progression of the Digital Asset Market Clarity Act in the Senate has slowed. If the process doesn’t accelerate by early 2026, it may not become law before the midterm elections. Trump appears likely to lose the midterms, jeopardizing the Senate and House majority, turning crypto laws into an indefinitely anticipated issue.
- •Significant institutional exits. The last four weeks saw exits close to $5 billion.
- •Profit realization by long-term holders.
Capo’s Crypto Forecasts
Beyond the above reasons, much more is happening, but Bitcoin’s dreadful performance is undeniable. Few expected such a disappointing November. Experiencing its worst November since 2022, Bitcoin should now be bouncing back from its lows. The possibility of peace between Russia and Ukraine is rising, which could mean a fall in oil prices. In fact, JPM set a target of $30 for oil by 2027 today, which would be significant for inflation.
In his recent analysis, Capo shared the following chart, suggesting a rebound near $105,000 could occur. This is a bold prediction because he expects a subsequent decline to the main support level at $53,000.
Meanwhile, Amazon plans to invest up to $50 billion to expand AI and supercomputer infrastructure (AWS Top Secret, AWS Secret, and AWS GovCloud) for U.S. governmental agencies. Nvidia is also permitted to sell chips to China. We can expect some positive news soon.