Citigroup "Bitcoin plunge influenced by high correlation with the stock market… ETF inflows remain steady"

Citigroup said the recent large-scale leveraged liquidation event revealed Bitcoin (BTC)'s 'linkage with the stock market.' However, even amid US-China trade tensions, inflows into exchange-traded funds (ETFs) have remained steady, so it kept its year-end and 12-month targets unchanged.

On the 14th (local time), CoinDesk reported that Citigroup said in a report, "Deepening US-China trade tensions triggered a sharp drop in the futures market, which spread to the crypto asset (cryptocurrency) market," and "this liquidation event confirmed that Bitcoin still reacts sensitively to stock market volatility." Last Friday's plunge erased about 500 billion dollars from the crypto asset market, and about 19 billion dollars worth of positions were liquidated in the derivatives market.

The report said Bitcoin briefly plunged 13% in one hour to as low as 102,000 dollars but later rebounded and was trading around 111,700 dollars. Citigroup said, "After the crash both markets (stocks and crypto assets) have recovered some losses and regained stability."

Nevertheless, ETF inflows remained steady. Citigroup said, "Despite this correction, inflows into spot Bitcoin ETFs have remained robust, led by new investors with low leverage ratios," and "this means the demand base remains solid."

Citigroup kept its year-end Bitcoin price forecast at 133,000 dollars and its Ethereum (ETH) target at 4,500 dollars, and set 12-month targets at 181,000 dollars and 5,400 dollars, respectively. The bank added, "Ongoing ETF inflows support the base case, and the downside scenario is limited to a prolonged stock market slump."