Citi bank has lowered its 12-month price targets for Bitcoin and Ether, pointing to weaker demand for spot ETFs and less optimism about new US crypto laws boosting institutional investment soon. The bank now projects that Ether will drop from $3,175 to $2,240 and Bitcoin will drop from $112,000 to $82,000. According to Citi, there is now no compelling rationale for additional investor interest, therefore it no longer anticipates net inflows into cryptocurrency ETFs this year. Despite the fact that the general economic forecast is still favourable, this shift indicates that institutional investors are become more cautious.
In a recent study, Citi analyst Alex Saunders stated that the bank no longer thinks that advancements in US regulations will encourage institutional investors and financial advisors to invest more in cryptocurrency. Now, Citi expects ETF flows to stay flat over the next year.
Spot Bitcoin ETFs drove much of the institutional demand when they launched in early 2024, but that momentum has faded. In June, there were almost $4 billion in net outflows, the largest monthly withdrawal since these ETFs began. Ongoing redemptions have pushed ETF flows for the year into negative territory.
Citi says ETF demand is still the main factor affecting crypto prices. As investors grow more cautious, the bank thinks Bitcoin and Ether may have trouble rising again unless more institutional buyers come back.
The report also pointed out worries about digital asset treasury companies. If the market deteriorates, investors fear that some of these companies may begin to sell more Bitcoin. Even while recent sales have been modest, they have negatively impacted the mood of the market.
Caution is also suggested by technical signals. Both Ether and Bitcoin are now trading below their 200-day moving averages, which are important benchmarks for many traders. In the meanwhile, some investors have transferred their funds from cryptocurrency to investments in artificial intelligence, which have done better this year.
Even with lower forecasts, Citi still sees a chance for recovery. In the best-case scenario, increased institutional demand, more individual investors, and improved regulation may raise Ether to $2,932 and Bitcoin to $108,000 within the next year. In the worst case, Bitcoin may fall to $53,000 and Ether to $1,094 if the economy deteriorates and ETF withdrawals persist.
Citi also said that while stronger US stock markets might help cryptocurrencies a little, good economic news alone probably won’t make up for weak investment flows. The bank thinks that a real boost in ETF demand or surprise regulatory changes could quickly improve things, but for now, it expects the crypto market to remain cautious.
Citi Slashes Bitcoin and Ether Targets as ETF Flows Turn Negative
According to Reuters, Citi cut its 12-month forecasts for bitcoin and ether, lowering its bitcoin target from $112,000 to $82,000 and its ether target from $3,175 to $2,240. Citi also reduced its expected ETF net… pic.twitter.com/W4nZo90zl5
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