Citi worsens bitcoin forecast by 20% due to stalled cryptocurrency laws in the US

Citigroup significantly lowered 12-month target benchmarks for key cryptocurrencies: bitcoin and Ethereum. The main factor in the reassessment was the slowness of U.S. lawmakers. The lack of clear rules of the game discourages large investors and hinders investments in cryptocurrency exchange-traded funds (ETFs).

The bank cut its annual bitcoin price forecast by just over 20%, from $143,000 to $112,000, and its Ethereum valuation from $4304 to $3,175, Reuters reports. Regulatory clarity would spur mass adoption of cryptoassets and investment fund inflows, but "the window of opportunity for relevant legislation in the U.S. this year is narrowing," warned Citi investment strategist Alex Saunders.

In the worst case scenario - if the US economy slips into recession - bitcoin could fall to $58,000 and Ethereum to $1198 within a year, Saunders believes. In the "bullish" scenario, based on strong demand from retail and institutional investors, the expert estimates the growth ceiling at $165,000 for bitcoin and $4488 for Ethereum.

In the short term, bitcoin will trade near the $70,000 mark, Citi expects. Quotes already take into account the pre-election background in the U.S., and their further movement will be determined by news about the progress of the development and adoption of cryptocurrency legislation in the States, the bank said.

Consideration of The Clarity Act - a new sweeping bill on digital assets - has stalled in the U.S. Congress due to opposition from the banking lobby and the crypto industry. Instead of working on a new document, the Senate is bogged down in debating an old one, trying to decide how to close a legal hole in last year's GENIUS Act on stablecoins - cryptocurrencies mostly tightly pegged to the U.S. dollar. Cryptocurrency exchanges are pushing for the right to charge investors interest income on stablecoins, while traditional banks are strongly opposed, fearing an outflow of funds from classic deposits.

The chances of passing The Clarity Act may noticeably decrease in case the Democratic Party wins the midterm parliamentary elections in November, in the ranks of which there is no unity on the issues of crypto-regulation, writes Reuters. The situation is aggravated by the fact that part of the Democrats demands to prohibit officials from making money on crypto projects. Since the family of US President Donald Trump has its own cryptocurrency platform - World Liberty Financial, analysts doubt that he will agree to sign a document with such an amendment.

Last week was the first week in 2026 when the spot bitcoin-ETF market saw capital inflows, according to the website of Gate, one of the world's largest crypto exchanges, citing data from investment platform SoSoValue. BlackRock's IBIT fund became the undisputed leader, with a net weekly inflow of $600 million, or more than 78% of the total volume. The positive dynamics also spread to spot ETFs based on Ethereum, which attracted $161 million over the same period.

Immediately after the start of the war in Iran, bitcoin fell by 7%. But two weeks later, the largest cryptocurrency added more than 11%. By contrast, traditional benchmarks and defensive assets - the S&P 500, Nasdaq and gold - lost between 2% and 5%. According to Nikolaos Panigirtzoglou, managing director at JPMorgan Chase, there was a clear divergence in the market: the largest gold ETF, SPDR Gold Trust, lost 2.7% of assets, while IBIT added 1.5%. According to Gate, analysts attributed this to the fact that bitcoin, which is traded around the clock, recovered faster from geopolitical risks.

At the time of publication, according to Coinmarketcap, bitcoin is trading at $73985 and Ethereum is at $2339.

This article was AI-translated and verified by a human editor