The cryptocurrency sector is encountering a fresh wave of cold sentiment. Bitcoin has recently fallen below the critical $60,000 technical level, prompting major financial institutions to reassess their outlooks.
Citi Group has significantly lowered its 12-month price predictions for both Bitcoin and Ethereum. The bank cited weakening investor interest, negative net flows into cryptocurrency exchange-traded funds (ETFs), and a lack of progress in U.S. digital asset legislation as factors damaging the investment case for these leading digital assets.
Citi reduced its Bitcoin target from $112,000 to $82,000, and its Ethereum target from $3,175 to $2,240. In a bear-case scenario, which assumes a shallow economic recession and persistent ETF outflows, the bank projects Bitcoin could fall to $53,000 and Ethereum to $1,094 over the next year.
Key Drivers for the Downgrade
The primary reason for the downgrade was a revision of assumptions regarding ETF inflows. Citi's analyst team adjusted their 12-month net ETF inflow forecast from $10 billion down to approximately zero, noting that ETF flows have recently turned negative and are a crucial price driver. Year-to-date, U.S.-listed Bitcoin ETFs have seen net outflows of around $3.3 billion.
The bank expects broader institutional adoption to remain stagnant until new catalysts emerge. It also pointed to slow legislative progress and market concerns over potential large-scale Bitcoin sales by digital asset reserve companies as dampening investor sentiment.
Wider Market Context and Capital Rotation
This period of weakness for cryptocurrencies coincides with a significant rotation of capital into assets related to artificial intelligence (AI) computing infrastructure. The powerful AI-driven bull market has propelled the Philadelphia Semiconductor Index (SOX) to an 81% surge in Q2, its strongest quarterly performance on record.
Analysts note that this "AI trade" is siphoning marginal risk capital away from the crypto space. One firm, Bernstein, suggested that weaker ETF flows for Bitcoin in 2026 are partly due to retail and institutional funds shifting toward AI-related assets.
Other Institutions Adjust Forecasts
Citi is not alone in tempering its crypto optimism. Standard Chartered, previously known as one of the most bullish voices on Bitcoin, has also notably lowered its targets. The bank now sees a short-term risk of Bitcoin falling toward $50,000 and Ethereum toward $1,400. It has also cut its end-2026 target for Bitcoin to $100,000 and for Ethereum to $4,000, while maintaining its long-term bullish framework for 2030.
Furthermore, investment firm TD Cowen has reportedly lowered its year-end Bitcoin target to $100,000. Data shows that Bitcoin ETFs experienced net outflows of approximately $4.5 billion in June alone, marking the largest monthly net outflow this year and a record high since the ETFs' inception.
Underlying Market Pressures
The recent crypto winter is underpinned by a triple repricing of assets like Bitcoin and Ethereum. First, ETFs have shifted from being a source of institutional buying pressure to a source of redemption pressure, undermining a key narrative from 2024. Second, high interest rates, a strong U.S. dollar, and expectations of further Federal Reserve hikes are suppressing the valuation of non-yielding assets, making Bitcoin behave more like a high-beta risk asset. Third, as noted, the AI computing trade is attracting risk capital.
Market intelligence from Glassnode indicates that the scale and duration of recent ETF outflows suggest traditional investors, including Wall Street asset managers, remain in a defensive posture. Unlike past Bitcoin pullbacks that attracted strong ETF buying, institutional investors now appear to be choosing to reduce their exposure.
As of the latest pre-market trading data, Bitcoin was priced at $58,864.27, having broken below $60,000 last week to hit its weakest level since September 2024. This represents a decline of roughly 50% from its all-time high of $126,223.18 in October last year. Ethereum was trading at $1,585.63, its lowest level since April 2025.
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