Wall Street bank Citigroup (C) said the cryptocurrency market is approaching an important inflection point after weeks of decline.
Bitcoin It fell to around $73,000 before stabilizing, with further losses taking the price below the bank’s estimated U.S. spot Bitcoin exchange-traded fund (ETF) average entry price of $81,600. At press time, the largest cryptocurrency was trading at approximately $76,100.
The report noted that ETF inflows, the main source of new demand, have slowed significantly, while long liquidations continue to occur in the futures market.
“Cryptocurrency markets are exhibiting similar volatility to precious metals, but without the upside,” analyst Alex Saunders wrote in a note on Tuesday.
Bitcoin is often referred to as “digital gold,” but it has yet to mirror the precious metal’s recent strength. While gold rallied on the back of geopolitical risks and macro uncertainty, Bitcoin remains under pressure, highlighting its continued sensitivity to liquidity conditions and risk sentiment rather than safe-haven demand.
Regulation remains a key potential catalyst, but progress on the U.S. Digital Asset Market Structure Act has been slow and uneven, Sanders said. While Senate negotiations continue, delays and mixed political support have dampened sentiment, with market-implied odds of passage falling.
The analyst also pointed to macro risks, including concerns about a shrinking Federal Reserve balance sheet, which has historically put pressure on cryptocurrencies through reduced bank liquidity. Despite growing concerns about a continued crypto winter, Citi said this remains a tail risk rather than a base case.
With the average ETF holder currently underwater and Bitcoin prices approaching pre-U.S. presidential election levels of around $70,000, the market is approaching levels that could be decisive for its near-term direction, the report said.
Read more: Bitwise Thinks Cryptocurrency Winter Is About to End
