Citi Analysts Predict Bitcoin Price Targets Based on Simple Forecast Model
Analysts at banking giant Citi have developed a new way of valuing digital assets, particularly Bitcoin (BTC), by considering the influence of demand on its price. In a report recently published in the Financial Times, Citigroup analysts Alex Saunders and Nathaniel Rupert suggest that the price of Bitcoin is driven by how many people want to own it.
Previously, Citi’s Bitcoin price models included factors such as mining electricity costs and adoption rates. However, the analysts have revised their forecast to acknowledge that cryptocurrency assets are now an integral part of the traditional macroeconomic landscape, impacting the average investor’s portfolio.
According to the analysts, the growing market capitalization of crypto assets has made them a significant player in the financial world. As a result, even investors who were previously indifferent to cryptocurrencies now need to consider them in managing their portfolios.
Citi has set three price targets for Bitcoin by the end of the year: a “bull case” of $199,340, a “base case” of $135,133, and a “bear” case of $63,675.
The analysts highlight that the primary driver of Bitcoin’s price currently is the net weekly flows into Bitcoin-based exchange-traded funds (ETFs). They note a strong correlation between these flows and BTC returns, with 41% of Bitcoin return variation explained by flows alone.
So far this year, there have been over $19 billion in flows into Bitcoin ETFs, with $5.5 billion added month-to-date. The analysts anticipate continued flows for the remainder of the year, potentially exceeding last year’s levels. Each $1 billion of weekly flows is associated with a 3.6% return increase, demonstrating the significant impact of flows on price forecasts.
Conclusion
As the cryptocurrency market continues to evolve and gain mainstream acceptance, traditional financial institutions like Citi are adapting their models to account for the growing influence of digital assets. By considering factors such as demand and ETF flows, analysts are able to provide more accurate price targets for Bitcoin, offering valuable insights for investors navigating this dynamic market.
Stay updated on the latest cryptocurrency news and developments by following us on X, Facebook, and Telegram. Don’t miss out on important updates – subscribe to get email alerts delivered directly to your inbox.
Check out the latest price action and explore The Daily Hodl Mix for a comprehensive overview of the cryptocurrency market.
Generated Image: DALLE3