Citi raises bitcoin target to $113,000, ether to $3,028 as inflows pick up

Citi's increased forecasts give a strong backing to the crypto recovery, potentially drawing in institutional investors that stayed on the sidelines after bitcoin's drop from its all-time peak. Because the outlook depends on consistent ETF inflows, weekly flow figures become an important indicator, particularly following last week's marked deceleration. The larger upside potential for bitcoin compared with ether could alter their relative standing, given ether's recent stronger gains. Macroeconomic conditions remain the deciding variable, and a stronger dollar or an additional climb in Treasury yields are the biggest risks to Citi's view.

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Earlier:

• A year on from its $126,000 record, bitcoin acts as a bet on interest rates, not an inflation hedge.

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Citi has grown more optimistic about crypto, yet it is backing bitcoin over ether, the token that has led the recent rally.

Summary:

• Citi increased its 12-month bitcoin price target to $113,000 from $82,000 and its ether forecast to $3,028 from $2,240, according to Reuters.
• The bank pointed to increased crypto activity, a favorable macro environment, and renewed ETF inflows, anticipating roughly $5 billion in inflows over the next year.
• Citi noted that the Senate's failure to pass the Clarity Act limited the prospects for legislation, but SEC rule announcements helped improve sentiment.
• Over the past three months, bitcoin has risen nearly 40% and ether roughly 68%, reducing their year-to-date declines to approximately 4% and 9%.
• The price targets suggest roughly 31% potential gain for bitcoin compared with about 11% for ether.

Citigroup increased its 12-month price predictions for bitcoin and ether, citing heightened crypto market activity, a supportive macroeconomic backdrop, and resuming inflows into ETFs.

In a research note issued late last week, the bank raised its bitcoin price target to $113,000 from $82,000 and its ether forecast to $3,028 from $2,240, as reported by Reuters. Citi anticipates that crypto inflows will restart at a more moderate but consistent rate as financial advisors and brokerages slowly increase their bitcoin allocations, and it projects approximately $5 billion in inflows over the coming year.

The increased forecasts arrive amid a regulatory hurdle. The US Senate could not move forward with the Clarity Act, a bill designed to establish a framework for digital asset markets. Citi stated that the bill's defeat reduced the scope for market-structure legislation but led to SEC rule announcements that helped alleviate negative sentiment.

Cryptocurrency prices have staged a strong recovery in recent months. Bitcoin has climbed almost 40% in the last three months and ether around 68%, bringing their year-to-date declines to about 4% and 9% respectively. The bounce in bitcoin from its July trough was aided by a weaker dollar after the US Treasury bought back longer-term bonds, as reported by Reuters.

The price targets indicate a significant divergence between the two biggest cryptocurrencies. At the time the forecasts were released, bitcoin was trading around $86,000 and ether near $2,700, so Citi's projections imply upside of roughly 31% for bitcoin versus only about 11% for ether, even though ether has performed better lately. According to an analysis of the note, ether's rapid rally has already accounted for most of its short-term potential, whereas bitcoin is in a better position to gain from fresh institutional inflows.

The outlook continues to rely heavily on the wider macroeconomic environment. Citi pointed to a favorable backdrop, but other financial institutions forecast a stronger dollar going forward, which could pressure crypto. Given that US Treasury yields are close to multi-decade highs, investors also require higher returns from assets that generate no income, increasing the threshold for the consistent ETF flows that support Citi's projections.