This downgrade marks a stark reversal from Citi’s previous outlook, which assumed that passage of U.S. legislation on digital asset market structure would boost adoption by traditional financial advisors and investors. The bank now believes that the deadline has passed, leaving the market without a significant catalyst.
Saunders said ETF flows continue to be the main force behind crypto prices, with recent demand turning negative as investors retreated from risk.
According to the bank’s analyst, sentiment was also affected by fears that digital asset treasury (DAT) companies could become net sellers of Bitcoin. Strategy’s recent corporate actions have amplified these fears despite relatively modest BTC sales.
The report notes that both bitcoin and ether remain below key technical levels, including their 200-day moving averages, while hot money has shifted toward AI-related investments.
The bank’s revised forecast assumes stable ETF flows in its base case. In the bull case, stronger adoption by individuals and institutions takes bitcoin to $108,000 and ether to $2,932. His bearish scenario, based on macro-recessionary conditions and continued ETF outflows, sees BTC falling to $53,000 and ETH to $1,094.
While the bank’s equity strategists have become more constructive on U.S. stocks, providing some support through crypto stocks’ correlation, the report says positive macroeconomic factors are insufficient to offset weakening flows.
