Bitcoin Price Target Downgraded, ETF Inflow Expectations Lowered
The latest report has lowered the price target for Bitcoin over the next year from $143,000 to $112,000. At the time of the update, Bitcoin was trading close to $74,000, indicating that Citigroup remains optimistic about Bitcoin's upside potential, albeit to a lesser extent than before. The bank noted that the slowdown in U.S. legislative momentum is a significant reason for the adjustment. Currently, the market-implied probability of comprehensive cryptocurrency legislation passing is close to 60%.
Exchange-traded fund (ETF) demand remains central to Citigroup's perspective. Despite lowering the forecast for new ETF inflows to $10 billion, Citigroup still views these products as key factors for any substantial rebound in Bitcoin. Analyst Alex Sanders stated,
“Even with the expectation for ETF demand reduced to $10 billion, it remains the most important positive factor in the price outlook.”
Sanders emphasized that Bitcoin's rebound has faced challenges since reaching an all-time high last October, primarily due to the pressure from leveraged position liquidations and the waning impact of the April halving event. He pointed out that recent price movements have lingered below significant technical resistance levels, with $70,000 becoming a critical threshold in the pre-election trading narrative.
Citigroup's research outlines a scenario where, if ETF adoption strengthens, Bitcoin could rise to $165,000 within the next 12 months. In a pessimistic environment associated with a potential economic contraction, Citigroup expects prices could slide to $58,000.
Ethereum Forecast Reduced Due to Slow Legislative Progress
The 12-month target for Ethereum has been lowered from $4,304 to $3,175, while trading levels at the time of the report were around $2,330. In Citigroup's view, weakened network activity and soft demand have led to a reduction in their forecast for Ethereum ETF inflows to $2.5 billion.
Sanders believes that Ethereum is particularly sensitive to activity and regulatory clarity, with recent on-chain metrics remaining at low levels. He emphasized that regulatory progress is crucial for restoring institutional interest in the asset. The report noted that the likelihood of passing significant digital asset legislation before the end of the year seems to be diminishing, which could limit Ethereum's short-term upside potential.
The study mentioned that the CLARITY Act has already passed in the House but is facing delays in the Senate. This legislation aims to provide clearer definitions and regulatory boundaries for tokens, designating the roles of the Securities and Exchange Commission and the Commodity Futures Trading Commission in oversight.