Bitcoin Faces Halving-Driven Headwinds, Citigroup Says, With ETF Outflows Nearing $4B

The crypto market has slipped into a familiar second-year post-halving downturn, with persistent ETF outflows and rising anxiety among long-term holders dragging bitcoin closer to Citigroup’s bear-case projections.

Citigroup noted that October’s futures-market washout dealt a major blow to sentiment, triggering nearly $4 billion in outflows from U.S. bitcoin ETFs and wiping out the asset’s year-to-date gains. With inflows slowing to a standstill, bitcoin has fallen back toward the average cost basis of ETF investors and is now behaving more in line with the bank’s bearish scenario than its base case.

According to the report, long-term holders have grown increasingly cautious as bitcoin enters what has historically been the weakest period of the halving cycle. On-chain data shows older coins moving and large wallets trimming exposure, signaling growing unease.

Risk appetite across major cryptocurrencies has faded sharply since the early-October flash crash, which Citi links to broader macroeconomic stress. As a result, bitcoin is underperforming relative to its typical market drivers and appears to be lacking near-term catalysts unless equities recover or U.S. digital-asset policy sees meaningful progress, analyst Alex Saunders wrote.

While interest in bitcoin hasn’t disappeared, Saunders said, long-term holders are staying defensive, and new investors have little incentive to buy with bitcoin trading below key technical levels.

Saunders previously expected bitcoin ETFs to draw $7.5 billion in net inflows by year-end, but the recent string of redemptions now places bitcoin uncomfortably close to Citi’s $82,000 bear-case outlook. The bank views $80,000 as a critical threshold for ETF investors and maintains that regulatory movement in 2025 could reignite demand. Its 12-month forecasts remain unchanged: $25 billion in ETF inflows and a bitcoin price target of $181,000.

Bitcoin was trading near $86,500 at the time of publication.