Wall Street bank Citi (C) refined its crypto valuation models to reflect the evolving dynamics of the digital asset market, producing a new year-end forecast that puts bitcoin (BTC) at $135,000 in its base case.
In the bank’s most optimistic scenario, the largest cryptocurrency could climb to $199,000 by the end of the year, while a more bearish outlook, shaped largely by weak equities, pulls the forecast down to $64,000.
The updated outlook incorporates a trio of key drivers: user adoption, macroeconomic conditions and demand from spot exchange-traded funds (ETFs), the bank said in a report Thursday.
The core of Citi’s approach begins with an adoption model based on user activity. The bank’s analysts projected a 20% increase in user growth, along with linear network effects. On its own that would support a price of roughly $75,000.
From there, macroeconomic factors subtract about $3,200, led by soft equity and gold performance, while an assumed $15 billion in additional ETF flows add around $63,000 to the forecast. The result: A base-case year-end target of $135,000.
ETF inflows have become a central force in shaping bitcoin’s price action since the approval of U.S. spot products in January 2024. Citi estimates that these flows alone now account for over 40% of recent BTC price variation, giving them an outsized role in its new model.
While the adoption curve still serves as the anchor, the growing integration of crypto into traditional finance through the ETFs, index inclusion and greater regulatory acceptance, means macro and institutional flows are rising in importance, the report said.
Citi’s analysts note that the risk to their forecast is tilted to the upside. ETF demand has been accelerating faster than expected, and user activity shows a slower-than-modeled decay rate, suggesting that network effects may persist longer than initially projected.
Bitcoin’s trajectory now depends as much on capital allocation strategies and investor flows as it does on technological adoption, the report said.
Read more: Crypto Inflows Surge to $60B Year-to-Date, Outpacing Private Equity: JPMorgan
