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Citi Says Crypto’s Weakness Stems From Slowing ETF Flows and Fading Risk Appetite
The Wall Street bank blamed recent market underperformance on October liquidations, cooling demand from spot ETFs, and weakening technicals.
Nov 5, 2025, 3:03 p.m.
What to know:
- Citi pointed to October 10 liquidations as a key hit to crypto risk appetite.
- Slowing U.S. spot ETF inflows threaten bitcoin’s bullish case.
- Onchain data show declining whale holdings and weak technicals, the bank said.
Wall Street bank Citi (C) said the latest bout of crypto market weakness comes despite buoyant equity performance, with October’s sharp liquidations leaving a dent in investor confidence.
The Oct. 10 sell-off curtailed risk-taking not only among leveraged crypto traders but also among newer spot exchange-traded fund (ETF) investors, who have since pulled back, analysts Alex Saunders and Nathaniel Rupert wrote in a Tuesday report.
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Flows into U.S. spot bitcoin ETFs have slowed sharply in recent weeks, undermining what the analysts called a critical pillar of support for its positive outlook.
The bank’s forecasts assume steady ETF inflows as financial advisors and other investors gradually add bitcoin exposure. With that momentum stalling, the report warned that sentiment could remain soft.
Onchain data adds to the cautious tone. The analysts noted that large bitcoin holders have been shrinking in number while smaller retail wallets continue to rise, a sign that some long-term investors may be selling. Declining funding rates further suggest waning demand for leverage.
From a technical standpoint, the outlook isn’t improving either. Bitcoin has slipped below its 200-day moving average (SMA), a level Citi says could weigh further on demand given the market’s reliance on such indicators. The bank also linked bitcoin’s weakness to tightening bank liquidity, as reserves have been drained and short-term rates remain high.
While the industry is still early in its broader adoption cycle, the report concluded that spot ETF flows remain the key signal to watch for any turn in crypto sentiment.
Read more: Citi Says Crypto’s Correlation With Stocks Tightens as Volatility Returns
AI Disclaimer: Parts of this article were generated with the assistance from AI tools and reviewed by our editorial team to ensure accuracy and adherence to our standards. For more information, see CoinDesk's full AI Policy.
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