Bitcoin’s lack of fresh investors matters more than Strategy’s sale, Citi says
Strategy unloading of bitcoin may have rattled markets, but Citi said the bigger issue for bitcoin is a missing bid from new buyers.
What to know:
- Citi said Strategy’s recent bitcoin sale was part of a previously disclosed tax-optimization plan and does not alter the firm’s broader strategy.
- The bank estimated spot bitcoin ETF flows explain roughly 45% of weekly BTC price moves and remain the best gauge of investor adoption.
- The bank expects sentiment to remain subdued as ETF flows turn negative and prospects for a U.S. crypto market structure bill diminish.
“Recent flows have been negative, and the chances for the passage of a U.S. market structure bill (a potential catalyst for renewed investor interest in our view) are diminishing,” analyst Alex Saunders wrote in the Tuesday report.
Markets were rattled this week after Strategy disclosed the sale of a small portion of its bitcoin holdings, marking a rare departure from Executive Chairman Michael Saylor’s long-standing “buy and hold” approach.
While the company said the transaction was tied to tax-planning considerations, the move sparked concerns that one of bitcoin’s most influential corporate backers could become a seller, contributing to a bout of weakness in BTC and renewed scrutiny of the digital asset treasury model.
Saunders continues to view spot bitcoin exchange-traded fund (ETF) flows as the primary driver of BTC prices, estimating they account for about 45% of weekly return variation. The analyst said recent ETF flows have turned negative, highlighting a broader lack of investor demand for the cryptocurrency.
