Economy

Citi says ETF outflows drive crypto market downturn

08:57

By: Dakir Madiha

Zoom

The recent decline in cryptocurrency markets has been driven primarily by weakening institutional demand rather than isolated corporate transactions, according to market analysis attributed to Citigroup. The bank’s assessment points to sustained outflows from Bitcoin exchange-traded funds as the dominant factor behind recent price pressure, outweighing the limited impact of corporate activity such as Strategy’s Bitcoin sale.

Strategy, formerly known as MicroStrategy, disclosed the sale of 32 Bitcoin between May 26 and May 31 at an average price of 77,135 dollars per unit, generating about 2.5 million dollars. The proceeds were used to support distributions on its preferred shares, marking the company’s first confirmed Bitcoin sale since 2022. Despite market attention, the transaction represented a minimal fraction of its holdings, which stand at approximately 843,706 BTC, or about 0.004 percent of its treasury position.

Market pressure, however, has been more closely tied to exchange-traded fund flows. Data cited in the analysis shows that US spot Bitcoin ETFs recorded 1.67 billion dollars in net outflows in the week ending June 1, extending a three-week streak of withdrawals totaling 4.21 billion dollars. This reversal follows a strong April, when the same products attracted 2 billion dollars in net inflows, reflecting a sharp shift in investor appetite amid broader risk aversion and geopolitical uncertainty.

Citigroup’s broader outlook reflects a more cautious stance compared with earlier in the year, when it lowered its 12-month Bitcoin price target from 143,000 dollars to 112,000 dollars. The revision was linked to slower regulatory momentum in the United States and weakening ETF demand. Corporate accumulation trends have also cooled, with external data indicating a steep decline in institutional Bitcoin purchases outside the ETF channel compared with peak levels in 2025.