Citi Downgrades Crypto Outlook as Digital Asset Legislation Slows

Citigroup has reportedly reduced its 12-month forecast for bitcoin and ethereum.

The downgrade is due in part to slow progress on cryptocurrency legislation in the U.S., Reuters reported Tuesday (March. 17).

Movement on the crypto market structure legislation known as the Clarity Act has stalled in the Senate amid disagreement over stablecoin rules, leading Citi to lower its 12-month bitcoin price forecast to $112,000 from $143,000 and its ethereum projection from $4,304 to $3,175.

“Regulatory catalysts will drive further adoption and flows but the window of opportunity for U.S. legislation this year is narrowing,” Citi strategist Alex Saunders said in a note, per Reuters.

The bank said that in a recessionary macro landscape, bitcoin could fall to $58,000 and ether to $1,198. In a more optimistic scenario, stronger investment demand could help push bitcoin as high as $165,000 and ether to $4,488. Bitcoin was trading at $73,827 mid-morning Tuesday, with ether (ETH) at $2,235.

“ETH will be especially sensitive to user activity metrics, which have been weak recently, but stablecoin and tokenization trends may increase interest and usage,” Citi added.

Reuters noted the chances of passing crypto legislation would drop even further if Democrats retake Congress in November, as lawmakers from that party are more divided on rewriting rules to accommodate digital assets.

The Clarity Act has been stalled since January amid conflict between crypto companies and the banking industry. Crypto firms object to proposals from the Senate Banking Committee that would block them from paying rewards to stablecoin holders. Banks argue that allowing stablecoin rewards could cause a deposit flight.

In a recent social media post, President Donald Trump said banks “need to make a good deal” with the crypto sector to allow the legislation to proceed. This came after the president held a meeting with Brian Armstrong, chief executive of crypto exchange Coinbase.

Speaking with the Wolf of All Streets podcast earlier this month, former Commodity Futures Trading Commission (CFTC) chair Christopher Giancarlo warned that if banks don’t abandon their stance, crypto will still continue to flourish, but in places outside the U.S.

“If the banks resist this now, it’s not going to go away. It’s just going to go to Europe. It’s going to go to Asia … and then American banks will say, ‘Whoa.’ Our analog, identity-based, message-based system is no longer working anywhere outside,” he said.

Giancarlo placed the “betting odds” of the bill passing at about 60-40, noting that there were still several issues to be resolved.