Citigroup, once a proponent of a $143,000 Bitcoin price target and predicting U.S. crypto regulation by 2026, has significantly revised its outlook. Just three months later, the renowned financial institution has slashed its target price by a substantial $31,000. The shift isn't attributed to issues with Bitcoin itself, but rather to the political landscape in Washington D.C. becoming the pivotal factor.
Currently, Bitcoin is trading around $73,968, while Ethereum hovers near $2,330.
'Digital Asset Market Clarity Act' Dominates Market Expectations
Citi's analysis report clearly outlines the political reasoning. The passage of the bill requires the support of at least seven Democratic senators. Some Democrats are actively pushing a measure to prohibit elected officials from profiting from cryptocurrency investments, an issue gaining traction due to scrutiny of the Trump family's 'World Liberty Financial' project. Analysts suggest this political dynamic could reduce President Trump's likelihood of signing the bill.
If Democrats gain more seats in the November midterm elections, the chances of the bill passing will further diminish, as significant divisions remain within the Democratic party regarding federal cryptocurrency rule reforms.
Citi's current forecast range encompasses various possibilities. Under a recession scenario, the bank anticipates Bitcoin could fall to $58,000 and Ethereum to $1,198. Conversely, its more optimistic projection, based on stronger end-investor demand, sees Bitcoin rising to $165,000 and Ethereum reaching $4,488. Regarding Ethereum, Citi also notes that while user activity metrics appear weak, growth in stablecoins and tokenization trends could boost market interest in the future.
Citi views $70,000 as a critical level for Bitcoin, describing it as the price point before the U.S. election and a potential range-trading bottom while the market awaits legislative news. Given Bitcoin's current price around $73,000, this bottom support is closer than its $112,000 target price above.
The 'Digital Asset Market Clarity Act' has emerged as the most significant variable in Wall Street's outlook for the crypto market. Currently, the bill's progress appears to be stalled.
Citi's downward revision of its Bitcoin forecast is not due to issues with Bitcoin itself, but rather due to political delays in Washington concerning the advancement of the 'Digital Asset Market Clarity Act'.
Citi's latest 12-month Bitcoin price forecast stands at $112,000, a reduction from the $143,000 target set three months ago.