Wall Street bank Citigroup said the October wipeout of crypto futures shattered sentiment, generating nearly $4 billion in bitcoin. exchange-traded fund outflows and the erasure of year-to-date gains.
With new flows drying up, bitcoin has moved back toward the average ETF holders’ cost basis and is trading more like Citi’s bear case than its base case.
The bank said long-term holders are growing increasingly concerned as the market enters the historically weak second year of the halving cycle, with on-chain data showing older supply on the move and large portfolios reducing their positions.
Risk appetite has evaporated among the majors since early October. A flash crash linked to broader macroeconomic tensions, leaving Bitcoin underperforming its usual drivers and lacking near-term catalysts unless stocks rebound or Washington’s digital asset legislation moves forward, analyst Alex Saunders wrote in Friday’s report.
Interest hasn’t disappeared, Saunders said, but long-term holders are on the defensive and new entrants see no reason to step in as bitcoin trades below key technical levels.
Saunders had expected $7.5 billion in ETF inflows by the end of the year, but negative flows now put bitcoin near the bank’s $82,000 bear case.
The company sees $80,000 as a pivotal level for ETF holders and says a regulatory breakthrough next year could restore demand, keeping its 12-month targets unchanged at $25 billion in flows and a bitcoin price of $181,000.
Bitcoin was trading around $86,500 at press time.
Learn more: Bitcoin weakness sends warning to stocks, but liquidity could change soon, says Citi
