Citi: Insufficient New Investor Inflows Are the Real Reason Behind Bitcoin's Pressure
N.R. Finch
Citi analyst Saunders argues the real drag on Bitcoin is not Strategy's sell-down but a dry-up in new buyers — spot-ETF flows have turned negative and fading crypto-legislation prospects are closing the door on fresh institutional capital.
Is the market overreacting to Strategy's Bitcoin sale?
Strategy flagged the move on its Q1 earnings call: the sell-down is a tax-loss harvesting exercise, a routine portfolio optimization.
This means → it was a planned action, not a reversal of Strategy's long-term holding thesis.
Citi analyst Alex Saunders states explicitly: selling by digital-asset treasury companies is not the main driver of Bitcoin's recent weakness — the market read too much into it.
So what is actually dragging Bitcoin down?
Saunders treats spot-Bitcoin ETF flows — a fund that lets ordinary investors buy Bitcoin the way they buy stocks — as the top price driver, estimating they explain roughly 45% of weekly return variation.
Recent ETF inflows have flipped to net outflows, a direct signal that overall demand for Bitcoin is cooling.
In plain terms = the buy-side tap has shut off — it is not a seller crashing the price, it is new money no longer showing up.
What does the stalled crypto bill mean?
The U.S. crypto market-structure bill — legislation aimed at creating a unified regulatory framework for digital-asset trading — now looks less likely to pass this year.
The bill had been seen as a potential catalyst to draw a new wave of institutional capital; its dimming prospects directly shrink Bitcoin's near-term window for inflows.
This means → the "policy tailwind" the market was counting on is probably not coming, and institutions stay on the sidelines.
Where does Bitcoin go from here?
Bitcoin continues to underperform U.S. equities, and with the legislative catalyst fading, sentiment stays subdued.
Citi sees no turnaround unless there is either meaningful regulatory progress or a renewed wave of concern about U.S. fiscal sustainability — the kind of worry that tends to push capital toward alternative assets like Bitcoin.
At the time of the report, Bitcoin was trading at roughly $67,200.
Content is for reference only, not financial advice.