Wall Street giant Citigroup has significantly lowered its 12-month price forecasts for Bitcoin (BTC) and Ethereum (ETH), directly attributing the downgrade to stalled progress on key U.S. crypto legislation, specifically the CLARITY Act. The bank's revised targets now stand at $112,000 for Bitcoin and $3,175 for Ethereum, down sharply from previous forecasts of $143,000 and $4,304, respectively.
The downgrade, detailed in a report from analyst Alex Saunders, is rooted in the belief that delayed regulatory clarity is a "quantifiable headwind" suppressing institutional capital inflows into digital assets. Citigroup's logic is straightforward: without clear rules from Congress, large institutional investors will remain hesitant to allocate significant capital, directly impacting demand and, consequently, price valuations in the bank's models.
The central issue is the CLARITY Act, a sweeping market-structure bill that aims to resolve the long-running jurisdictional turf battle between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). The legislation, which has cleared the House but remains stalled in Senate negotiations, seeks to define which digital assets are securities and which are commodities, establishing clear registration frameworks for exchanges. Citigroup analysts framed this legislative delay as a concrete barrier to broader institutional participation.
Despite the near-term cuts, Citigroup's outlook is not entirely bearish. The bank sees potential for a 2026 comeback if crypto regulation advances, suggesting the targets could be raised again should Congress act. The report outlines a bull-case scenario—dependent on stronger ETF adoption—with Bitcoin reaching $165,000 and Ethereum $4,488. Conversely, a bear case reflecting recessionary conditions projects targets as low as $58,000 for BTC and $1,198 for ETH.
The revision aligns with a broader cautious tone across institutional research, where price targets are increasingly tied to regulatory milestones. The bank noted that while ETF inflows remain the "most important positive factor," it has lowered its 12-month demand assumptions to $10 billion for Bitcoin ETFs and $2.5 billion for Ethereum ETFs. The analyst also flagged weakening market momentum since Bitcoin's October peak, citing futures liquidations, positioning fatigue, and prices trading below key technical levels.
