TLDR
- Citigroup cuts Bitcoin’s 12-month target to $112,000 and Ether’s to $3,175 due to regulatory concerns.
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Slower U.S. crypto legislation and weak network activity affect Citigroup’s price outlook.
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Despite the cut, both Bitcoin and Ether still show potential upside if ETF demand rises.
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Regulatory clarity is crucial for institutional crypto flows, with the CLARITY Act still pending.
Citigroup has revised its 12-month price targets for Bitcoin and Ether, citing slower U.S. crypto legislation, weak network activity, and reduced expectations for ETF inflows. In a new report, the investment bank lowered its Bitcoin target from $143,000 to $112,000 and Ether’s target from $4,304 to $3,175.
Influence of U.S. Crypto Legislation on Market Sentiment
One of the primary reasons for Citigroup’s lowered targets is the uncertainty surrounding U.S. crypto legislation. The bank highlighted that while the CLARITY Act, a significant market-structure bill, has cleared the House of Representatives, it is stalled in the Senate.
The delay in passing comprehensive legislation is causing concern for institutional investors, who seek regulatory clarity before deploying significant capital into the market.
Citigroup analyst Alex Saunders noted that the odds of digital asset legislation passing this year are slipping, with market-implied probabilities now at approximately 60%. The report stated that the lack of clear rules for crypto assets, which would define categories and assign regulatory oversight, has created uncertainty. This has made it difficult for institutions to navigate the regulatory environment, preventing a large-scale flow of capital into the market.
ETF Inflows as a Key Market Driver
Another factor contributing to Citigroup’s cautious outlook is the reduced expectation for ETF inflows. ETFs have played a pivotal role in providing institutional access to Bitcoin and Ether. However, Citigroup lowered its 12-month demand assumptions for Bitcoin ETFs to $10 billion and $2.5 billion for Ether, significantly less than earlier forecasts.
Despite this downward revision, Citigroup still sees ETF demand as a critical upside driver. The bank acknowledged that recent ETF demand, though modest, has helped stabilize the market amid broader macroeconomic uncertainty and geopolitical tensions.
However, the report emphasized that the ETF inflow projections for Bitcoin and Ether may not be enough to push prices to previously forecasted highs without stronger regulatory support.
Weak Network Activity and Fading Post-Halving Enthusiasm
Network activity and on-chain usage of Bitcoin and Ether have also shown signs of weakness. After Bitcoin’s surge to record highs in October, prices have drifted lower, weighed down by weak risk appetite and fading enthusiasm from the post-halving rally. Bitcoin has been trading below key technical levels, while Ether has lagged even further due to weaker on-chain activity.
The report pointed out that Bitcoin and Ether are now in a range-bound market, with Bitcoin’s support around the $70,000 mark, a crucial psychological level. Ether’s outlook is even more uncertain due to its higher sensitivity to on-chain activity. However, Citigroup suggested there is potential upside driven by stablecoin growth, tokenization trends, and possible regulatory focus on decentralized finance (DeFi).
Citigroup presented both a bullish and bearish case for Bitcoin and Ether. In the bullish scenario, where U.S. legislation progresses and ETF demand surges, Bitcoin could reach $165,000, while Ether could hit $4,488. Conversely, in the bearish scenario, driven by recessionary macro conditions, Bitcoin’s price could fall to $58,000, and Ether could drop to $1,198.
The report concluded that while the current outlook remains cautious, both Bitcoin and Ether still have substantial potential upside. However, this potential hinges on clearer regulatory rules and stronger evidence of durable, utility-driven growth.
