Citi’s Refined Crypto Valuation Models

Wall Street bank Citi (C) has updated its cryptocurrency valuation models to reflect evolving market dynamics, presenting a new year-end forecast for Bitcoin.

Year-End Forecast Estimates

• Base Case: $135,000
• Optimistic Scenario: $199,000
• Bearish Outlook: $64,000

The updated forecast considers three main drivers: user adoption, macroeconomic conditions, and demand from spot exchange-traded funds (ETFs).

Adoption Model

Citi’s analysts project a 20% increase in user growth, which would support a price of approximately $75,000. However, macroeconomic factors may decrease this value by about $3,200, primarily due to weak equity and gold performance. On the other hand, an anticipated $15 billion increase in ETF flows could add around $63,000 to the price forecast.

ETFs as a Driving Force

Since the approval of U.S. spot products in January 2024, ETF inflows have significantly impacted Bitcoin’s price, accounting for over 40% of recent price changes.

Key Insights

Citi’s report indicates that while the adoption curve remains central to the forecast, the integration of cryptocurrencies into traditional finance and institutional flows has gained importance.

Conclusion

Risks to the forecast seem tilted upwards, with accelerating ETF demand and better-than-expected user activity suggesting that Bitcoin’s price might be driven by capital allocation strategies and investor flows in addition to technological adoption.