A Wave of Leveraged Long Liquidations Exposed Bitcoin sensitivity of stocks, according to Wall Street bank Citigroup.
The bank said worsening trade tensions between the United States and China triggered a sharp sell-off in futures on Friday that spilled over into crypto, highlighting its volatility and correlation with stocks.
Crypto and stock markets have since recovered some losses, the report notes. The world’s largest cryptocurrency was trading around $111,700 at press time.
A violent flash crash hit crypto markets on Friday and wiped out more than $500 billion in value and forced nearly $20 billion in liquidations on derivatives platforms. Bitcoin fell as much as 13% in an hour, before bottoming near $102,000.
Citi said exchange-traded fund (ETF) flows remained resilient, likely driven by newer, less leveraged investors, and that it does not expect liquidations to derail demand.
Bitcoin and Ethereum remain near September levels, and the bank maintained its 12-month targets of $181,000 for BTC and $5,400 for ETH, with year-end forecasts of $133,000 and $4,500.
Citi said strong ETF flows support the base case, while the bear case depends on stock market weakness.
Learn more: Bitcoin ETF Flows Poised to Break Records in Q4, Says Crypto Asset Manager Bitwise
