Citi: "Bitcoin ETF inflows slowing... a key inflection point"

Citi, a global investment bank (IB), said in a recent analysis that Bitcoin (BTC) is nearing an inflection point that could determine its near-term price direction.

According to CoinDesk on the 4th (local time), Citi said in a report released the previous day (the 3rd) that “ETF inflows, a major source of new demand for Bitcoin, have slowed markedly,” adding that “in the futures market, liquidation of long positions is also continuing in part.” Citi noted that “Bitcoin is approaching the roughly $70,000 level that was formed before the U.S. presidential election,” and that “the market is moving toward a decisive price zone that could set the near-term direction.”

It also highlighted macroeconomic risks. Citi said that “the U.S. Federal Reserve’s (Fed) balance-sheet reduction has historically reduced bank liquidity and weighed on crypto markets,” adding that “while concerns about a prolonged crypto-market downturn are rising, this is not the base case but rather a ‘tail risk’ (a low-probability event with a large impact if it occurs).”

The report also mentioned the legislative status of the Digital Asset Market Structure Act (the Clarity Act). Citi said that “regulation remains the single most important potential catalyst,” but pointed out that progress on the Clarity Act is slow and inconsistent. It added that “U.S. Senate negotiations are ongoing, but delays (in legislation) have dampened market sentiment, and the market-implied probability of passage has also declined.”