Citi Warns Crypto Liquidations Are Shaking Investor Confidence

Citi analysts said the latest weakness in the cryptocurrency market is happening despite healthy equity performance.

That’s according to a report Wednesday (Nov. 6) from Coindesk, citing analysts from the Wall Street bank who say that sharp liquidations last month had left investors feeling less confident, including those investing in newer spot exchange-traded funds (ETF).

As the report noted, flows into U.S. spot bitcoin ETFs have slowed considerably in recent weeks, hindering what the analysts dubbed a crucial pillar of support for its positive outlook.

The analysts also pointed out that the number of large bitcoin holders has waned while smaller retail wallets keep rising, signaling that some long-term investors could be selling.

At the same time, Bitcoin has fallen below its 200-day moving average (SMA), which Citi said could further impede demand as the market depends on these indicators.

The bank also tied bitcoin’s weakness to a dip in bank liquidity, concluding that – although the industry is still early in its broader adoption cycle — spot ETF flows are still the main signal to monitor for any change in sentiment regarding crypto.

Last month saw historic levels of crypto liquidations as Beijing imposed new shipping limits in response to U.S. tariffs of 100% on imports from China. That triggered record liquidations of around $19 billion in crypto positions.

The crypto market continued to be shaky this week, with the price of both the two most popular digital assets — bitcoin and ether — declining amid investor fears about steep artificial intelligence (AI) valuations. A report by CNBC noted that investors in the crypto sector industry tend to have interest in the AI industry, meaning a dip in one space can be felt in the other.

In other crypto-related news, PYMNTS wrote earlier this week about the promises — and obstacles — of using stablecoins to make payments.

“Stablecoins today represent over $250 billion in circulating value, but that’s still a drop in the ocean of global money movement,” that report said. “What has held them back hasn’t been utility, as they already power billions of dollars in daily volume, but orchestration.”

Most companies, the report added, don’t want to hold crypto wallets, have to contend with gas fees or have to worry about digital asset regulation. They simply want the speed and savings of stablecoins, as well as the familiarity of embedded payments systems.