Citi lowered targets for Bitcoin and Ethereum amid declining investor interest, capital outflows from spot ETFs, and a prolonged pause in digital asset regulation in the United States of America.
According to Reuters, Citigroup revised its 12-month targets:
- Bitcoin: previous 12-month forecast — $112,000, new — $82,000.
- Ethereum: previous 12-month forecast — $3,175, new — $2,240.
Cryptocurrency remains a highly volatile asset, and Citigroup sees several risks for Bitcoin and the entire crypto market:
- High volatility of cryptocurrencies, causing prices to change rapidly on news and capital flows.
- Investor risk aversion amid weak market dynamics.
- Outflows from crypto funds and spot ETFs.
- Regulatory uncertainty in the US, where rules for digital assets still do not give the market new momentum.
- Competition from other assets, including stocks and instruments related to artificial intelligence.
Why Citigroup Changed Its Forecast
Analysts link the worsening outlook to a challenging year for the crypto market. Several factors intensified the pressure:
- Sharp price fluctuations.
- Investor attention shifting to IPOs of major companies.
- Ongoing outflows from crypto ETFs.
The IPOs of major companies became one of the topics that attracted increased interest this year. Against this backdrop, some capital and attention shifted from the crypto market to other instruments, including stocks.
A separate factor is the revision of expectations for inflows into exchange-traded funds. Previously, Citigroup estimated net investments in ETFs over a 12-month horizon at about $10 billion. Now this target has been reduced to zero, as flows have turned negative, and according to analysts, only a strong market catalyst could attract new buyers.
How ETFs Affect the Price of Bitcoin
Spot ETFs in the United States of America, after launching in 2024, became one of the key channels for institutional money entering the crypto market. When investors buy shares of such funds, management companies purchase the corresponding amount of Bitcoin for backing. This supports demand.
In the opposite direction, the mechanism works against the market. If investors redeem fund shares and withdraw money, managers have to sell Bitcoin from reserves. This adds extra pressure on the price, and capital flight from ETFs becomes an important signal for the entire sector.
Bitcoin was created as a decentralized digital currency that does not depend on government and banking structures. Its issuance is limited in advance: there can never be more than 21 million coins.
In a harsher scenario, Citigroup allows for a deeper drop next year:
- Bitcoin: pessimistic forecast — $53,000.
- Ethereum: pessimistic forecast — about $1,094.
This scenario assumes a recession in the macroeconomy and continued outflows from crypto exchange-traded funds.
The Market Looks to Artificial Intelligence
Investor sentiment was also affected by the slow pace of crypto regulation in the US and concerns that companies with large digital asset reserves might start selling. Among such players, Michael Saylor’s Strategy is mentioned.
Citigroup noted that weak demand for cryptocurrencies coincided with rising interest in assets related to artificial intelligence. Wintermute previously pointed out that the artificial intelligence sector and related stocks have become more attractive to investors and speculators than the crypto market.
According to Wintermute experts, even an improvement in the macroeconomic environment does not guarantee a return of capital to cryptocurrencies: money may primarily flow into shares of companies working with artificial intelligence.
On the morning of July 1, the price of Bitcoin hit a new low since September 2024, dropping to $57,700. This is more than twice as low as the October record of about $126,000. By 2:00 p.m. Moscow time, Bitcoin had recovered to about $58,500, and Ethereum was trading around $1,572, rolling back to April 2025 levels.
RBC-Crypto also noted a broader market reversal: crypto exchanges are increasingly looking toward stocks and gold, and Bitcoin lost 34% in the first half of the year, falling below $58,000. In the market, this looks like a broader shift: the capitalization of the crypto sector is declining, stocks, gold, and the artificial intelligence sector are competing more fiercely for investors’ money, and demand is increasingly shifting from some instruments to others. For investors, including those in Russia, such assessments are another reminder that a digital asset can quickly change price both on news and on capital moving between sectors.
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