Two prominent Wall Street investment banks, Citi and Stifel, have released cautious analyses predicting potential significant declines in Bitcoin's price, citing a confluence of macroeconomic pressures, regulatory uncertainty, and shifting market dynamics.
Citi analysts, including Alex Saunders, warn that Bitcoin is at a critical juncture, potentially retesting the $70,000 level. This outlook is driven by a noticeable slowdown in inflows into spot Bitcoin Exchange-Traded Funds (ETFs) and ongoing regulatory ambiguity in the United States. The bank notes that Bitcoin is currently trading well below the $81,600 average entry price for spot ETF investors, with long positions in the futures market facing continued liquidation.
Citi's analysis highlights the historical impact of the Federal Reserve's balance sheet reduction policy, which reduces bank liquidity and typically pressures crypto markets. While the bank characterizes a prolonged "crypto winter" as an "extreme risk" rather than a baseline scenario, it identifies U.S. cryptocurrency regulation as the most significant potential catalyst. However, progress on key legislation like the Clarity Act has been slow and uneven, with Senate deliberations and mixed political support lowering market expectations for its passage.
In a more severe forecast, investment bank Stifel warns that Bitcoin could face a plunge to the $38,000 level. This prediction is grounded in a historical examination of past market cycles and points to several fundamental headwinds. The primary catalyst cited is the Federal Reserve's ongoing monetary tightening, characterized by higher interest rates and quantitative tightening, which historically reduces risk appetite and negatively impacts high-volatility assets like cryptocurrencies.
Stifel emphasizes a tangible reduction in overall market liquidity, which can exacerbate sell-offs. The bank also points to concerning large-scale outflows from U.S. Spot Bitcoin ETFs, a major source of institutional demand since their 2024 launch. Persistent outflows directly remove buy-side pressure from the market.
Furthermore, Stifel identifies a crucial psychological shift, with market sentiment entering a stage of "extreme fear," indicated by declining exchange volumes, reduced DeFi activity, and a shift in social media discourse toward risk management. The bank cautions that this sentiment is driven by fundamental factors, making a simple contrarian investment strategy risky.
Both analyses suggest that a sustained Bitcoin price decline would have cascading effects across the broader digital asset ecosystem, potentially leading to more severe corrections in altcoins, compressed margins for crypto companies and miners, and testing the resilience of blockchain infrastructure.
