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The cryptocurrency is trading beneath significant ETF cost thresholds and approaching its pre-election price floor as contributions to these instruments diminish and obstacles accumulate, according to the bank.
Bitcoin approaches its pre-election floor as ETF inflows stagnate, according to Citi. (Pixabay, modified by CoinDesk)
Key points:
- Citi indicated that prolonged liquidations and susceptibility to equity and geopolitical risks continue to apply downward pressure on cryptocurrency values.
- Advancements regarding a U.S. market structure bill have been inconsistent, hindering renewed investor contributions.
- The bank identified the pre-U.S. presidential election price of $70,000 as crucial, considering the administration’s declared support for digital assets.
Cryptocurrency markets are nearing significant turning points following weeks of decline, as noted by Wall Street bank Citi (C).
Bitcoin declined to about $73,000 before finding stability, marking an extended downturn that has pushed prices below the bank’s estimated average entry price for U.S. spot bitcoin exchange-traded funds (ETFs) of $81,600. The largest cryptocurrency was trading at approximately $76,100 at the time of publication.
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The report highlighted that ETF inflows, a significant source of new demand, have notably diminished, while futures markets continue to experience segments of long liquidations.
“Crypto markets have shown volatility akin to that of precious metals yet without the corresponding gains,” analyst Alex Saunders stated in the report released on Tuesday.
Bitcoin is frequently referred to as “digital gold,” but it has not yet reflected the recent resilience observed in precious metals. While gold has surged amid geopolitical tensions and macroeconomic uncertainty, BTC has faced ongoing pressure, underscoring its persistent sensitivity to liquidity conditions and risk appetite rather than safe-haven demand.
Regulation remains a key potential driver, according to Saunders, but the progress on a U.S. digital asset market structure bill has been slow and erratic. Although Senate discussions are ongoing, delays and mixed political backing have dampened sentiment, with market-implied chances of passage declining.
The analyst also noted macroeconomic risks, including worries regarding a contracting Federal Reserve balance sheet, which historically impacts cryptocurrencies through decreased bank liquidity. While fears of an extended crypto winter are escalating, Citi indicated that this remains a tail risk rather than its primary scenario.
With average ETF holders currently experiencing losses and bitcoin approaching the approximately $70,000 it maintained prior to the U.S. presidential election, the report suggested that markets are nearing levels that could be crucial for short-term direction.
Read more: Bitwise argues crypto is near the end of a brutal winter
