Wall Street bank Citigroup said the fall in cryptocurrency futures in October crushed sentiment, generating nearly $4 billion in bitcoin. outflows from exchange-traded funds and erasing year-to-date gains.
With new flows drying up, bitcoin has retreated toward ETF holders’ average cost basis and is trading more like Citi’s bear case than its base case.
The bank said long-term holders are increasingly uneasy as the market enters the historically weak second year of the halving cycle, with on-chain data showing older supply movement and large portfolios trimming positions.
Risk appetite has evaporated across all major companies since early October. A sudden drop linked to broader macroeconomic stress left Bitcoin underperforming its usual drivers and lacking near-term catalysts unless stocks recover or Washington’s digital asset legislation advances, analyst Alex Saunders wrote in Friday’s report.
Interest hasn’t gone away, Saunders said, but long-term holders are on the defensive and newcomers see little reason to intervene as bitcoin trades below key technical levels.
Saunders expected $7.5 billion in ETF inflows by the end of the year, but negative flows now put bitcoin close to the bank’s bearish view of $82,000.
The firm views $80,000 as a critical level for ETF holders and says a regulatory breakthrough next year could restore demand, keeping its 12-month targets unchanged at $25 billion in flows and a bitcoin price of $181,000.
Bitcoin was trading around $86,500 at the time of this publication.
Read more: Bitcoin Weakness Sends Warning to Stocks, But Liquidity Could Soon Change, Citi Says
